UNIVERSITY OF NORTHAMPTON

Market Entry Report for

Internationalization of Samraat
Logs in the UK Logistics Sector
Undergraduate Dissertation- BUS4004
Word Count: 7854
Research Analyst: Siddharth Rai Trikha

Date of Submission: 5th May, 2019

Student ID: 18429336
Supervisor: Dr. Andrew Gough
Module Leader: Dr. Maged Zakher

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Contents
Executive Summary......................................................................................................................... 2
Introduction .................................................................................................................................... 4
1. Understanding the Company and Its Purpose ........................................................................ 5
2. A Bird’s Eye View: UK’s Macro Environment ........................................................................... 8
3. Market Analysis: A closer look at the Sector ......................................................................... 12
4. Management in a Cross-Cultural Environment ..................................................................... 14
5. Operations and Logistics Planning......................................................................................... 19
6. Marketing Plan....................................................................................................................... 24
7. Financial Planning and Timeline ............................................................................................ 26
Conclusion ..................................................................................................................................... 28
Personal Reflections...................................................................................................................... 30
References .................................................................................................................................... 31
Appendices.................................................................................................................................... 39

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Executive Summary
The UK’s logistics industry presents an intriguing study of contradictions and possibilities as this
maritime country is standing at the crossroads of Brexit. Under such circumstances, Samraat
Logs, an Indian 3rd Party Logistics firm is considering the opportunity of a market entry. The
company has observed substantial growth in its home market. Now, to overcome some intrinsic
locational disadvantages, it is planning a full-fledged internationalization.

On studying HM government’s policies, it has been revealed that some major projects like new
Free Trade Agreements with other countries and Custom-free ports are also being considered.
However, these haven’t yet received the Royal Assent, leaving the space open for uncertainties.
Nonetheless, other competitiveness enhancement projects, like large infrastructure
investments and logistics ‘clusters’, are underway, giving ample opportunity for a new entrant
to grow in the market. To optimally utilize these clusters, Samraat Logs should look for
collaboration, which is an emerging market trend in logistics, forming alliances with supply
chain partners and other complementing forces, to leverage their assets, networks and
expertise.

Samraat Logs is required to have a cross-cultural sensitivity to not only build these alliances, but
to fulfill the needs of its new British employees, who require an open, transparent and
democratic organization. As these traits are not in the organizational culture of this sole
proprietorship firm, the management is advised to decentralize the decision making process
and promote risk taking appetite in the employees.

Liverpool Waters, located inside the Merseyside cluster, has been selected as an operational
base for its exemplary infrastructure, proposed custom-free port and a large presence of
complementary forces.

It is advised to commence operations by 1st July, 2019 to benefit from a depreciating GBP (£).
While losses are forecasted for the first two years, the business will break even by the third
year, and generate enough profits to recover the capital invested by the end of the fifth
financial year.

The new operations would require an equity start-up capital of £100,000 to cover the initial
losses, pay upfront property expenses, and provide for working capital and contingency
reserves.

The long term corporate strategy is to collaborate with clients to create the best services,
supply chain partners to save costs and larger stakeholders like the academia to explore new
avenues.

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Introduction
This market entry report revolves around internationalizing Samraat Logs (henceforth
mentioned as SL), an Indian Third Party Logistics (3PL) company, in the UK. The research
establishes a strategic fit between the firm’s internal competencies and the market’s emerging
trends. The UK’s macro environment is analysed to gauge the effect of various socio-political
and economic changes, particularly Brexit, on the country’s logistics sector and the economy as
a whole. The industry is dissected further and looked at in detail to reveal key insights and
challenges, along with cross cultural profiling of the home and the host country. This analytical
segment forms a stable foundation for the ensuing operational, marketing and financial plan,
which is advised for a successful market entry.

Figure A: Explaining the research aspect of the project

Source: Self-compiled

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 1. Understanding the Company and Its Purpose
Business Model
Samraat Logs (SL), founded in 1997, has its existing base in New Delhi, India. Reporting annual
revenue of £1.5 million with a net profit of £120,000 in FY 18-19, it is displaying bright future
prospects for growth. (Appendix B)

Its core services include sea-based forwarding, i.e. freight and vessel space brokerage, and
documentation (CII, 2016). While forwarders are expected to bridge the gap between shipping
lines (ocean carriers) and exporters, a close study of the company reveals that SL, while doing
so, also adds value for their clients by providing them consultancy, customized services and
managing the whole supply chain. (Exhibit 1.1)

Exhibit 1.1: Forwarder’s Role and 3PL services

Source: Self Compiled

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Other services offered include extended credit periods to buyers and 24-hour Bill of Lading
delivery, the most important document in a supply chain, containing legally binding details of
the shipped goods and its ownership (Sudini et al., 2017; WTO, 2017). According to Bird and
Smith (2019), these traits, coupled with personal relations are appreciated by British exporters
more than the price competitiveness; increasing the order winning probability of SL
significantly. (See Exhibit 1.2)

Exhibit 1.2: Order-winners in UK’s Logistics Industry (Bird and Smith, 2019)
Source: https://www.barclayscorporate.com/content/dam/corppublic/corporate/Documents/Industry-
expertise/logistics-confidence-index-2018.pdf

These value added services are core competencies of SL, which according to Hamel and
Prahalad (1990) give sustainable competitive advantage to a firm over its rivals.

Being a sole proprietorship, it is a benevolent autocratic company, where the major decisions
are taken by the owner on the advice of some trusted associates and industry experts (Holman,
1997). This leadership structure is subjected to critical evaluation in Section 4, to assess its
suitability in the UK’s work culture.

Pitching Internationalization
SL operates from India and arranges 3PL services for UK’s exporters, through its local contacts.
This is termed as Ex-works (ICC, 2010, p2), or could be understood as exporting of services.
(Appendix C)

At present it is forwarding 100 Twenty Foot Equivalent containers (TEUs) per month, which it
plans to increase substantially after the market entry.

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Its rationale of internationalisation can be assessed using the Eclectic/OLI Model (Dunning,
1979).

Exhibit 1.3: Dunning’s Eclectic Paradigm

Source: https://ebrary.net/21274/management/dunnings_paradigm

Ownership
At present, along with goodwill, SL has market knowledge and an existing network which can be
leveraged to expand in the UK. Ownership of such assets, which provide some advantage to SL
over other companies, is the first affirmative dimension to invest in a new market (Ruhl, 2016).

Location
As discussed, SL is an exporter of services. However, this is getting increasingly unviable due to
the lack of real time control and information of moving goods and deployed assets. Moreover,
shipping companies prefer dealing with local forwarders due to trust factors. There is also a
financial advantage to operate from the UK, as freight charges in India are subjected to 5%
indirect GST (Ministry of Law and Justice, 2017), which is not levied to UK registered companies.
Therefore, there are clear locational advantages to reap out of this internationalisation.

Internalisation
Because of the nature of services, there is a higher trust factor required in the supply chain. It is
not viable to appoint a licensed agent or a sub-forwarder to act as mediatory between clients
and the firm. Also there are risks that the sub-contractor may gain knowledge of SL’s operations
and in turn may act as a substitute. Therefore, there are internalisation advantages to perform
the services directly.

Since there are all three advantages available to the company, therefore according to the OLI
paradigm, SL should consider making FDI decision i.e. executing the market entry. (Exhibit 1.3)

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However, its small size and low capital base makes it risky to consider cross-border expansions.
Having identified key strengths and weaknesses from an internal analysis, a study of the new
environment becomes significant to analyse the trends and spot a niche for the market entry.

2. A Bird’s Eye View: UK’s Macro Environment

Britain, an enterprising nation, traded goods worth £840 billion with the rest of the world in FY
2018-19, contributing a third to the country’s GDP (ONS, 2019). Logistics, a complementary
sector to export-import (EXIM), is poised to receive the dividends of this growth.

Additionally, there is a high chance to succeed in a business friendly country like the UK,
currently ranked 9th in the Ease of Doing Business Index (World Bank, 2019). However, Brexit,
whose impacts are far reaching, has created some uncertainty in the economy (Hawksworth et
al., 2019). This requires the researcher to link the PEST factors, and assess their complexities in
cohesion with one another (Johnson et al., 2017; Ho, 2014).

Intertwined Study: Political and Economic Environment

According to Dumitru (2019), the on-going Brexit impasse has created a set of outcomes, which
any new entrant will have to consider. (Exhibit 2.1)

Exhibit 2.1: Explaining Different Brexit Outcomes

Source: https://economics.rabobank.com/publications/2019/march/brexit-update-in-unchartered-territory-
again/

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While no major changes will be seen under a soft Brexit, in events of a hard Brexit, all UK-EU
Free Trade Agreements (FTAs) will come to a halt with trading relations reduced to standard
WTO terms (Department for International Trade, 2019; WTO, 2019). This will result in physical
borders and long custom check (Barnes, 2019), leading in serious supply chain disturbances,
especially for logisticians focusing on trade with EU, which is around 50% of the UK’s net trade
(ONS, 2019).

However, a Hard Brexit, or an exit from the Customs Union will give UK a trade and taxation
autonomy (International Trade Committee, 2019, p57). Taking this opportunity, UK is drafting
FTAs with other major economic partners like the US, China and India (ET, 2016; Davidson,
2016). An Indo-UK FTA will increase the trade in this corridor by almost 50% (Banga, 2016). This
will be the prime source of revenue for SL which will utilize its networks in India and the UK to
capture this market.

Exhibit 2.2: PESTWEB explaining Brexit’s impact on UK’s economy

Source: Self Compiled

Conversely, there is a risk involved because these FTAs take up to 7 years to be drafted and
implemented (Sanders, 2019). Therefore, SL cannot just rely on Indo-UK FTA. Moreover, a hard
Brexit would disturb the capacity planning of other 3PLs (Lawrence, 2019).

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Exhibit 2.2 explains another advantage of UK’s custom autonomy. Many individual groups and
MPs are batting for Super Charged Free-Ports in North of the country, particularly Liverpool and
Teeside, which would be Special Economic Zones (SEZs) where EXIM is not taxable (HC Deb, 11
October 2018; Houchen, 2018). This would boost UK’s GVA through EXIM activities by almost
£13.4 billion (Walker, 2018). Yet again, there is a policy uncertainty because this project has not
yet received the Royal Assent.

Further, in a bid to improve their logistics sector, the government has identified certain
locations, and developed them as clusters or centres of excellence, having state-of-art
infrastructure, business friendly environment, and availability of all the expertise required to
run successful operations (Department for Transport, 2019; Oxera, 2015). At these locations, all
supporting industries, including academia, policy makers and financiers ‘cluster’ around each
other, driving growth.

One such location is Merseyside (Liverpool) which has an advantage of first-class road and rail
network, close proximity to major demand hubs and large capacity overhaul proposed (Peel
Ports, 2011). Incidentally, Liverpool is also a proposed site of a Super Charged Free Port. This
makes the site worth exploring from an operational perspective in Section 5.

According to Blitz (2016), Brexit has also led to continuous volatility in GBP. (Exhibit 2.3)

Exhibit 2.3: Performance £/$

Source: https://www.bbc.co.uk/news/business-46862790

Pound is expected to stay low for a large part this year (Mustoe, 2019). This has complex impact
for SL:
 It is desirable for an Indian firm to bring capital from outside the UK.
 Boost to exports, resulting in increased demand.

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  A corollary of the same lies due to the nature of the industry. The firm will be earning in
US Dollars, but will reap less revenue gains, if the Pound continues to depreciate.

Social and Technological: Collaborations to stay ahead of the curve

Needs of social and technological environment requires SL to collaborate expertise with other
stakeholders. An important social barrier is the lack of awareness of the logistics industry’s
potential to new graduates, leading to severe skill shortage (FTA, 2018; Gough and Fassam,
2015). While struggling with this, SL should understand how technology is altering the Supply
Chain structure and its working. In their seminal paper, Frey and Osborne (2017) argue that
odds are 99%, that, the core freight agency job be computerized by the next decade. The high
susceptibility to computerization will undermine the basic functions of a forwarder. (Exhibit 2.4)

Exhibit 2.4: Susceptibility to Computerization

Source: Frey and Osborne (2017)

These social and technological phenomena require SL to work closely with national and
Liverpool’s local academic institutes to not only involve young professionals in the industry, but
also access the latest technological trends like e-collaborations, block chains and cloud
computing (DHL, 2018). SL’s management will have to undertake a strategic restructuring in the
long run, invest its capital into R&D and collaborate with policy-makers and 3PL partners to stay

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ahead of the curve. Such collaborations are common practices by market leaders like UPS and
Kueneh+Nagel (MarketLine, 2017).
While the most consequential factors have been considered, various other PEST factors are
analyzed in Appendix D.
After capturing the macro trends, SL’s management is now presented with a sectorial analysis
to find a niche for internationalization.

3. Market Analysis: A closer look at the Sector

The UK’s logistics industry has grown by 3.5% between 2013 and 2018, outperforming Germany
by well over 2%, and is predicted to have a CAGR of 3.1% till 2022 (MarketLine, 2018). High
growth negates the possibility of a zero-sum game. The country has also been consistently
ranked high in terms of Logistics Performance Index (World Bank, 2018).

However, the UK’s shipping and maritime industry, which complements the logistics sector, has
shrunk by 1.5% in 2018. Yet, it is noted that the containerized segment of shipping, which is
most profitable to operate in, accounts for 93% of the sector (MarketLine, 2019). Although
there is an uncertainty risk factor involved, yet logisticians are not holding back crucial capital
investments, displaying a high level of confidence in the industry (Bird and Smith, 2019; FTA,
2018).

UK Market’s Six Forces

An industry analysis reveals the following influential 6 forces (Porter, 1979; Nalebuff and
Brandenburger, 2015)

Exhibit 3.1: Market Forces Analysis

Source: Self Compiled

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The Shipping Lines/carriers (suppliers of containers and rates) are few in number, global in
nature, and control the global freight rates to some extent. Although the container supply-
demand forces and crude oil prices play a role, carriers like Maersk, CMA-CGM and MSC, hold
considerable power, because of their size. They are clearly the dominant partner in the
forwarder-liner relation, but these companies also value long term relations.

There is some threat of new entrants, because freight forwarding is not a capital intensive
business. But, new entrants are dealt with by fostering long lasting relations with exporters and
carriers, reducing their threat.

The industry is highly competitive with more than 2000 forwarders operating in the market
(BIFA, 2019; CILT, 2019). They vary in size; however some dominant players like Kuehne+Nagel,
APL Logs, Damco and DHL would be in direct competition with SL. This intense industry rivalry
can only be tackled by building the competencies and relationship.

As for the threat of substitute, there is hardly any, for a forwarder’s service, except a handful of
the clients dealing directly with the Line.

Exporters (buyers) vary in size and influence. Large corporate exporters wield greater influence,
while small players rely upon 3PLs to provide them real time market and freight information.
Nonetheless, exporters ultimately choose the forwarder giving them some power.

The sixth force analysis suggests the importance of complementary sectors which complete the
supply chain (Nalebuff and Brandernburger, 2015). As SL is a new entrant in the market,
therefore it would need the support of transporters, container yards and warehouse owners. It
has to build a network of trustworthy ‘complementors’, to leverage its USP of complete supply
chain management. This is explored in greater detail while planning operations for SL.
Therefore, it can be concluded that the complementary services are of considerable
importance.

The conclusion that can be drawn is that while it is difficult to stay profitable in an industry with
powerful suppliers, buyers, high competition and large dependence on complementary forces,
SL has to focus on building lasting networks and improve the value added services it offers.

After gaining an analytical insight into the sector, SL is advised to have a closer look at the
attitudes and work ethics difference between Indian and the British, in order to reach out to its
suppliers, exporters and more importantly to its new employees. What follows is a detailed
Cross-Cultural Analysis.

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 4. Management in a Cross-Cultural Environment
There are cultural and historic ties between India and the UK, which Samraat Logs (SL) can
exploit for the purpose of combining synergies of its Indian management and the British team.
These can be understood using two complementary models: Cultural Dimensions by Hofstede
(2011) and the GLOBE project (House et al., 2004). Appendix E contains a detailed cross-
cultural profiling of both the countries, however larger takeaways of the analysis are presented
here for managerial considerations.

Exhibit 4.1 and 4.2, draw out the commonalities and contrasts between the two cultures.

Exhibit 4.1: Hofstede’s 6 Cultural dimensions

Source: https://www.hofstede-insights.com/country-comparison/india,the-uk/

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 Exhibit 4.2: Graphical representation of GLOBE comparison (India and UK)
Source: Compiled from House et al. (2004; 2014)

There are a large number of similarities, important one being that both Indian and the British
work culture promotes risk taking abilities, innovation and a higher level of competitiveness,
allowing SL to drive growth by motivating the employees to do better. There is a mediocre
performance orientation, which however will have to be improved, but it can be useful to plan
for short term and alter the action course. Such similarities would be beneficial for SL.

However, some large psychic differences would compel SL to alter its HR and organizational
strategy. Naturally, entering an Anglo market (the UK) would be challenging for a South Asian
(Indian) company, which will have to be dealt with (Chhokar et al., 2008).

Both the studies conclude that, the new British employees would expect a more democratic
organizational structure. They would be driving their satisfaction from an open decision making
process, individual gains, equality, perks and promotion.

Furthermore, a charismatic, participative and team oriented style of leadership is more

effective in England (House et al., 2004), as opposed to India, where involving employees is not
a common practice. (Exhibit 4.3)

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 Exhibit 4.3: Type of leadership and its effectiveness in the UK
Source: https://globeproject.com/results/countries/GBR?menu=list#list

To meet these needs of an open and an equal organization, SL, a sole proprietor pursuing an
autocratic structure, would have to shift to a democratic one. The Model for Participative
Management (Van der Vliet, 2012; Skelly, 1989) is advised to the management for this purpose.
(Exhibit 4.4)

Exhibit 4.4: A model for Participative management

Source: Van der Vliet, 2012

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 The model advocates involvement of all the employees in goal setting and decision making
process. It also recommends employee participation in the implementation of strategic change,
which the company is undergoing by expanding in the UK. This results in employees having a
greater autonomy and a sense of meaning in their work. SL will have to cultivate an
environment of security while encouraging employees to take risk in order to be innovative,
which is in sync with the British psychology. An environment of commitment, innovation and
satisfaction will lead to a higher performance and productivity level, while simultaneously
incorporating the feedbacks received from the employees.

This concludes the analysis segment of the report, aimed at providing key market insights to the
firm. This information is used to prepare a SWOT matrix. (Exhibit B)
Exhibit B: SWOT analysis
Source: Self compiled

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Based on the results the TOWS matrix (Appendix F), the below plan of action is devised:

 Evaluate the clusters and identify key supply chain partners in an operational plan.
 A financial plan with a timeline is required taking into account the GBP (£) volatility.
 A marketing strategy is to be devised taking into the attitude differences between the
Indian and the British psyche.

Hereafter, the report lays out implementable strategies from various disciplines to assist SL in a
successful internationalization, subjected to its internal capabilities.

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 5. Operations and Logistics Planning
To build an efficient network, SL would have to locate itself in a suitable base. The county of
Northamptonshire is hailed as the logistics center of England (Lawrence, 2019; Bellot, 2019),
being centrally located between London, Birmingham, and major ports (NEP, 2013). While this
is ideal for inland distributions, landlocked Northamptonshire offers little value to a maritime
focused forwarder, requiring a corporate setup. The area is highly congested with more than
1400 logisticians (Gough and Fassam, 2015) and expensive land to offer (Invest Liverpool,
2018b, p14). Therefore another location will have to be analyzed for the market entry.

The UK government has planned a large scale capital overhaul of the country’s port and
infrastructure capacity in specially designated areas called ‘clusters’, to meet 3PL’s demand
expectation (Daft, 2019; FTA, 2018). These centers of excellence are incubated to support the
logistics industry nationally. (See Exhibit 5.1)

Exhibit 5.1: Maritime Clusters

Source: Department for Transport, 2019,

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Furthermore, there are plans to introduce Super Charged free ports in the UK, where EXIM
activities will be custom-free, boosting 3PL services in the area. The proposed sites are
displayed in Exhibit 5.2:

Exhibit 5.2: Supercharged Free Port Site

Source: Walker, 2018

Incidentally, Merseyside (Liverpool), a maritime cluster, has also been proposed as site for a
Super Charged Free Port (Walker, 2018). It is the fifth largest port in the UK, having a capacity

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to cater 33.4 million tons or 1.5 million TEUs per annum (UK Ports, 2019). Its cargo is directed
towards inter-continental trade, making it immune to the effect of Brexit. (Exhibit 5.2)

For these reasons, Merseyside is scrutinized further for the purpose of operationalizing.

Liverpool: A Regional Analysis

Exhibit 5.3: Explaining Liverpool geographical asset

Source: Invest Liverpool, 2018a, p5

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The port of Liverpool, owned and managed by Peel Ports, serves to half of the UK’s trade
(Market Liverpool, 2018). The region is well connected to other demand hubs in the UK, being
catered by an extensive rail network, 15 motorways and two international airports (Mersey
Maritime, 2015), making it easier for SL to market itself across the country, without incurring
major costs.

Infrastructure to enhance the competitiveness of this region:

 £13 billion road networks, including a £250 million highway connecting the nodal points
of M57 and M58 to Liverpool2 (Exhibit 5.3). This highway, recently given a legal
clearance eases congestion around the port (BBC News, 2018).
 £1 billion port infrastructure including £400 million deep-water container terminal
Liverpool2 (Department for Transport, 2019), allowing mega vessels to berth at the
port, boosting the demand capacity (Kelly, 2016).
 Manchester ship canal (Pink line in Exhibit 5.3), linking Liverpool container terminals to
Manchester city, bringing Manchester located exporters in the reach a Liverpool
situated company, like SL.

3MG and Other Complementary Services

It was noted earlier that logistics trade depends substantially on complementary industries (6 th
Force). To build an effective supply chain, SL needs to analyze the regional presence of possible
alliance partners like Shipping Lines, 3PLs and the Mersey Multi-Modal Gateway (3MG).

3MG is an inland transshipment hub where containerized goods can change the medium of
transportation. Cargo from different parts of England is transported here via rail/road, and is
forwarded to the container terminals. To facilitate this movement, 3MG has 530,000 sq. ft. of
warehousing/Container Freight Stations with plans to extend it up to 3.5 million square feet.
(Halton Borough Council, 2014).

3MG is well connected to other major UK ports, giving SL a locational advantage. (Exhibit 4.5)

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 Exhibit 4.5: 3MG connected to Teeside, Felixstowe and Southampton
Source: http://3-mg.co.uk/

3MG is planning to upgrade its railway tracks and signaling networks at its Ditton Intermodal
Freight Connection line, for which it is looking to partner with beneficiaries like SL (Network
Rail, 2016). Thus it can be a strong opportunity to share minimal share of the up gradation cost
in the long run, in order to deepen the collaboration.

Van den Heuvel et al. (2014) argued that logistics clustering is mutually beneficial for all co-
located 3PLs as these firms tend to share assets, knowledge, personnel and expertise to create
efficiency and economies of scale (Rivera et al., 2016). Thus, SL can encourage asset based 3PLs
(transporters and warehouse owners) to pool expertise creating a synergized end-to-end
logistics chain, allowing all the partners to have a higher client reach, without having to invest
in new verticals and incurring large marketing costs.

Additionally, Liverpool being the UK headquarters of major shipping lines (Invest Liverpool,
2018a), is therefore, recommended as a suitable operational base for its connectivity to other
hubs and large scope of collaborations available in the region.

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 6. Marketing Plan
After finding a strategic location in Liverpool, Samraat Logs will have to create a comprehensive
marketing strategy to convert clients into loyal long standing partners using a 7P analysis. The
relationship driven nature of the industry requires a personal level of interaction between the
management and the clients. Therefore, the sales and customer relations process is advised to
be merged with strategizing and managerial roles, eliminating the need of a dedicated sales
force/ representative for the initial years.

7P Analysis

Product
The core product which the company offers is forwarding. However, the augmentation it
provides is by offering bespoke solutions; value added services, Supply chain management and
friendly process and finances.

Price
There is no generic pricing strategy as defined by Porter (1980), which logistics companies can
chose to follow. This is so because freight prices are highly fluctuating, and are largely
controlled by Shipping Lines. The only control held by forwarders is the margin per containers.
SL should make use of its proximity to carrier’s HQs and alliances to access special rates. SL
should practice market penetration strategies, which according to Ingenbleek and Van der Lans
(2013), is offering lower prices on services to enter a new market. The margin on services can
be increased subsequently once goodwill is built.

Place
As discussed in Operations planning, SL will locate itself in Liverpool, which is not only a vibrant
cluster Merseyside Enterprise Zone (HM Government, 2019a). Over here, SL has selected
Liverpool Waters, one of the sub segments in this Enterprise Zone, for its strategic location and
proximity to the city center, National Rail station and two International Airport (Liverpool LEP,
2019). Its operations will be conducted in India and the UK to provide forwarding solutions all
over the world. It will reach its customers via corporate meets, e-mail and telemarketing.

Promotion
SL is advised to take membership of trade bodies and benefit through their networking events
and resources. Some of the relevant professional bodies that SL can associate are described in
further detail in Appendix . Also the management-cum-sales team should communicate the
message to UK’s exporters that long term associations will result in per container saving and
better services.

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People
Human resource and relationship management are central to the success of SL’s UK division.
While the employees can be empowered and the organization can be democratized using the
cross cultural insights, a relationship management model should be utilized by the company to
enhance its goodwill with its clients by an increased human interaction. (Exhibit 6.1)

Exhibit 6.1: Model for Relationship Management

Source: Babu, 2016

Managing people and relations requires SL to understand their expectations and build
partnerships. This leads to customer satisfaction and increased profitability. The people
management has to be assessed using customer feedback, and client involvement at all stages.

Physical Evidence
In England, the physical evidence of the services is the premises which Samraat Logs will
operate in. Its asset based alliance partners in Liverpool and 3MG will also form further proof of
the services and its consistency.

Process
This is the most important segment of the 7P analysis in the marketing plan. A service blueprint,
devised by Shostack (1984), has been applied for SL. This blueprint identifies customer
interaction points at user action and front stage level, like marketing, real-time cargo
information and documentation. These points are to be handled by personalization and
deploying the best employees, while meticulously executing backstage and support services,
like booking, in a time bound way to create the best services. (Appendix H)

The corporate aim should be to convert suitable leads into partners, rather than just clients.

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 7. Financial Planning and Timeline
At this final stage, a financial proposal is drawn, which implements the conclusions of marketing
and operational plan, to ascertain the amount to be invested by Samraat Logs in the UK. The
breakeven point and viability has also been assessed.

Key Assumptions and timelines:

 Suggested date for commencing operations: Before Q2 of FY 19-20, advisably by 1 st
July, 2019, to benefit from the depreciating GBP (£).
 Output from current operations: 100 Twenty-Foot Equivalent containers (TEUs) per
month.
 Freight Buying and selling cost is highly variable, though average forwarder’s margin is
£20/container.
To attract new customers, SL should practice penetration strategies and reduce the
margin per new container to £10, meanwhile continuing the existing lot at the
standard margin.
 Office Rental in Liverpool Waters: £2000/ month (Regus, 2019).
 Marketing cost which includes membership of various logistics forums, promotion and
traveling for client meets: 10% of the Gross Margin per month
 Salary: £2000 per employee per month. (Appendix I)
 Professional fees include accounting, taxation and legal management, which are
assumed to be 10% of the Gross Margin.

Sales Buildup process:

 There are potentially over a hundred corporate exporters in the Liverpool region
having capacity of over 100 TEUs per month.
 These exporters will be tapped through various professional forums.
 Out of these 100, 20 are expected to respond in positive.
 Further meetings and promotional activities are expected to be conducted, whose
marketing cost (10%) is deductible from the gross margin.
 On a conservative side, two of these clients will choose SL, and give orders up to 100
TEUs/ month.
 This activity is expected to be continued till first 5 years of the company, and two at
least new clients are expected to be developed every year.

On the basis of these assumptions and Sales buildup process, a tentative Statement of Profit
and Loss is prepared for 5 year period till 31 st March, 2024. (Appendix J)

According to the forecast, SL requires £100,000 as its initial startup cost, which includes the
working capital to bear losses, pay upfront expenses, and provide for client credits and

26 | P a g e
contingency reserves. This figure is advised to be borne out of SL’s Indian equity, to benefit
from the depreciating GBP (£).

Exhibit 7.1: Corporate Timeline using the data from P/L (Appendix J)
Source: Self-compiled

The projected timeline reveals that SL will remain unprofitable for the first two year and break
even in the third year. It will stabilize completely by the fifth year by when it generates
optimum returns to cover the start-up cost. (Exhibit 7.1)

27 | P a g e
 Exhibit C: Snapshot of the case in Business Canvas Model
Conclusion Source: Self-compiled

28 | P a g e
The market entry strategy prepared for Samraat Logs presents a strong case of how an Indian
3PL can find a niche to enter the UK market using its core competencies. Major considerations
were made to devise a suitable marketing, operational and financial plan, whose conclusions
are summed up in the Business Canvas (Osterwalder and Pigneur, 2010). The report finds merit
in Liverpool as a prospective location for the market entry, while advising SL to aim nationally
for clients and other partners.

Key recurring themes of this report are collaborations, connectivity and alliances with 3PLs,
ports, academia and professional bodies. Logistics is essentially a relationship driven industry,
and these collaborations will help a small business to compensate for the lack of large assets,
capital intensive technology and representation in government authorities, which its large
competitors possess. The market’s prospects are bright, but there are intrinsic challenges like
policy uncertainty around Brexit, Free Ports and FTAs. On the internal front, SL is advised to
alter its organizational structure and work further on its core competencies.

It is the first time that this small entrepreneur driven business is committing a foreign
investment worth £100,000 with a dedicated cross border presence. The report advises SL to
practice resilience while building its UK arm, especially in the first two years of its infancy. The
success of this project lies in the company’s capability to adapt to a new environment,
overcome the cross-cultural gaps and develop lasting alliances.

29 | P a g e
Personal Reflections
This international business project was a unique opportunity for me to think and plan this
assignment strategically, which required proper management of time and other resources. A
major skill that I am now confident of is project management. I was able to successfully break
down this large piece of work, and complete it under the timelines. I was able to pursue a topic
and a sector of my choice, making me realize my own strengths and short comings as an
individual.

It gave me a chance to deeply study and analyse the UK’s market and its logistics sector at the
macro and micro level, both, which led me to gain a deep understanding of the various
outcomes of Brexit on the said sector. My analytical insight would come handy in an
international business context where I can advise a sound strategy to my employer to work
around Brexit and consider the various options available. This will give me an edge over the
other graduates and help me become more employable in an MNC having or aiming to have
operations in the UK.

As part of this dissertation, I got the opportunity to consult various industry experts, including,
professionals and academicians based in Northampton, Liverpool and Corby boosting my
network and contacts. This helped me in expanding my horizon of practical knowledge. As part
of my ground visit to these places, I can successfully share the geographic and logistical
knowledge to assist my future employer with their operational planning. This project gave me
an opportunity to think about the various organizational functions in details, and plan to excel
in them. I can share these assumptions with my employer to add value to their organization and
strategy.

In the due course of this report I came across many cross cultural similarities and differences
and thought deeply on how to manage them with respect to Samraat Logs. This understanding
and management of challenges will help me immensely in not only working in multi-cultural
companies in the UK myself but also helping others going through a similar work culture
transition.

The success of this report is due to the skills I’ve learnt through this dissertation. Tasks like
market analysis and writing a business report are important, and may even be waiting for me
on my first employment later this year, which I will now be able to undertake efficiently. I’d also
take this opportunity to thank my supervisor Dr. Andrew Gough who acted like a moral
compass and enriched the study with his deep insights.

The journey of challenges is not just limited to this paper and now I feel prepared and excited
to practically implement this project in the coming years.

30 | P a g e
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Appendices
Appendix A: Academic Underpinning of the Report
Discipline Models Used
Internal Analysis:
 Core Competencies (Hamel and
Prahald, 1990)
Rationale Internationalizing:
 OLI Paradigm (Dunning, 1979)
Strategic Management Micro External Analysis
 Porter’s Five Forces Analysis
Macro External Analysis:
 PESTLE
Recommendations/ summarizing:
 Osetwalder’s Canvas
 SWOT-TOWS
 7Ps of Service Marketing
Marketing  Service Blue Printing (Shostack, 1984)
 Relationship Management (Babu,
2016)
 Ascertaining capital requirement
Finance  Cost and revenue model
 Corporate Timeline
Cross Cultural Research  6D Analysis (Hofstede, 2011)
 GLOBE Project (House et al., 2004)
 Model for Participative Management
(Skelley, 1989)

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Appendix B: SL’s Financial Report

Source: Samraat Logs ITR, 2018

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Appendix C: EX-WORKS

Graphic C1: Explaining INCOTERMS, 2010

Source: https://internationalcommercialterms.guru/

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Appendix D: PEST Analysis
Economic Environment

❖ The corporate Tax rate in the UK is much more competitive at 17%, as opposed to
almost 35% in India for an SME, lying in the same bracket. (Deloitte, 2018).
❖ There is also a low interest rate at 0.75%, allowing access to inexpensive credit to
businesses (BOE, 2019; BBC News, 2019).
❖ Logistics Performance Index: 6th Rank (World Bank, 2018)
❖ Ease of Doing Business Index: 9th Rank (World Bank, 2018)
❖ Expected Rate of Growth (18-20): 1.3% (Exchequer Secretary, 2018)

Social factors

❖ The biggest social barrier that the industry faces is the public perception of the industry. As
per the Logistics Survey (FTA, 2018), the industry’s perception of the public understanding
was 0.93 out of 4. So the firm may face hurdle in finding a large pool of skilled human
resource (Gough and Fassam, 2015).
❖ The number of women at work is increasing by around 200,000 per year (Parliament. House
of Common, 2018). This expanding woman involvement can be utilized more in consultancy
and service aspect of the business.
❖ The Indian community forms the third largest diaspora in the UK, numbering up to more
than 1.5 million (ONS, 2018). This increases the social acceptability and employment pool
(HR) for the company.

Technological factors
th
❖ UK has 4 ranking in the Global Innovation Index (WIPO, 2018), investing a net of $49
billion in R&D (MarketLine, 2017).
❖ The logistics industry is being changed by several innovations, majorly Artificial
Intelligence (AI) and cloud computing.

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Appendix E: Cross Cultural Research and Detailed Profiling- India & UK

Graphic E1: Hofstede’s cultural dimensions

Source: https://usdkexpats.org/theory/hofstedes-cultural-dimensions

Hofstede (2011) concludes the following insights about India’s and UK’s culture:

There are clear differences in the attitude to power and hierarchy. While the unequal authority
distribution is accepted in India, it is disliked in the UK. There is a higher level of Individualism,
i.e. focus on individual gains and output, similar to a higher indulgence level which results in the
British employees drawing their perks and additional remunerations immediately, as opposed
to Indian employees, who believe in savings and delayed gratification. Considering all these
differences in cultural attributes, SL’s management will have to make the organization more
open, democratic and implement individual reward policy to satisfy the new employees. These
strategic HR and organizational changes will be challenging to implement, because the Indian
counterpart is used to a more autocratic style of leadership, and forgoing some of its benefits
like psychological safety within the team and creating order (Hoogh et al., 2015).

There is a higher level of competitiveness in the UK, as seen from a higher masculinity score.
This should be used by the company to drive excellence, similar to the low uncertainty
avoidance both in the UK and India, allowing the management and the team to be more
innovative, and have a higher risk appetite. The ‘mediocre’ score on long term orientation can

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be a benefit, as the employees and management can work in cohesion to work out flexible
short and medium term strategies, which can be altered with the fast moving logistics industry
trends. Such strategies are termed as Emergent Strategy by Minztberg (1987).

Therefore SL is advised to restructure the managing style to suit the local needs, and leverage
upon the similarities between UK’s and its home culture.

Explaining GLOBE Dimensions

The GLOBE study borrows its dimensions from Hofstede (1980; 2011), Kluckhohn and
Strodtbeck (1961) and also from McClelland et al. (1953). In this sense, it is an extension of
cross-cultural research (CCR) conducted by several authors over the years and offers nine
insightful dimensions, explained in Figure E2

Figure E2: Explaining GLOBE Dimensions

Source: Shi and Wang, 2011

As explained by House et al. (2004), the dimensions have two parts: first, the actual
performance of a country, which is termed ‘As is’, the other part being ‘Should be’, which
managers consider to be ideal. This adds a higher level of complexity, because any new entrant
in the UK will not only have to change their HR and management policies as per the current

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practices, but it should also focus on the expectations and values the British employees and
managers consider ideal, in order to increase the workplace harmony.

Figure E3: Explaining the cross cultural divide between India and The UK
Source: https://globeproject.com

While some of the dimensions have already been discussed by Hofstede (2011), other are
evaluated here.
As seen from Figure E3, there is a major difference in the level of assertiveness. Indians, as
suggested by the findings of GLOBE are less assertive or confrontational. Although British
partners and employees will be more aggressive in their relationship management, but the
ideal case, even in the UK, is a lower level of assertiveness.
In relation to Humane Orientation, UK’s society pays less attention to encouraging or rewarding
altruism, fairness and care in comparison to India. However, the managers here express the
need for more such rewarding system to promote the humanness of an organization. Therefore
the managerial team of Samraat Logs should expect receiving a comparatively less human

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orientation in the beginning, while keeping their policies open so that an encouragement
system can be easily implemented which promotes kindness and sharing in the organization.
Similarly, the new employees would expect company to promote higher gender egalitarianism
and lower power distance.
The level performance orientation is largely similar between the two countries. While UK is
currently less particular, managers feel that it is ideal for companies to boost the focus on
performance. Similarly, Indians and British fare equally on future orientation. While both are
average, companies in the UK should enhance their future planning, and investments, as per
the findings of GLOBE.
The level of collectivism promoted by organizations (institutional collectivism) is similar in both
countries, and incidentally that matches the future expectations of managers in the UK as well.
On the contrary, employees in India are more team-oriented (In-group collectivism).
Nonetheless, even in the UK, a higher level of team spirit, belongingness and collectivism is
considered ideal.
Therefore, there are a lot of dissimilarities, but simultaneously, the ideal case or ‘should be’
tends to mediate the gap that the company will have to bridge through its HR policies.
Conversely, similarities such as average level of performance orientation will have to be
focused upon, due to higher ‘should be’ expectations in the UK.

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Appendix F: TOWS matrix
Opportunity Threat

➢ Possible Free Trade Agreements ➢ Possibilities of Hard

with India, USA and China Brexit that may
➢ Huge government investment hamper UK-EU trade,
➢ Cluster development in places which is 50% of its
like Liverpool total trade.
➢ Depreciating Pound ➢ Absence of a possible
o Desirable to bring social acceptability for
capital from India the trade, which can
o Rising exports reduce the talent pool.
2X2 TOWS Matrix
➢ Social concern for
carbon footprint by
3PL firms
➢ Depreciating Pound
o Revenue loss
against
Dollars,
trading
currency of
forwarders

Strength SO ST

➢ Experienced. ● Use network relations to exploit ● Develop a

➢ UK market rising trade between UK and comprehensive
knowledge India financial appraisal that
➢ Goodwill and ● Display agility to take will include pound
lasting trade advantage of clusters. fluctuation
relations in UK ● Take advantage of the ● Focus more on
and India depreciating Pound network sourcing from
➢ High level of India to compensate
agility and EU trade loss.
innovation
capacity
➢ Value added
➢ personalized
services

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 Weakness WO WT

➢ Lack of large ● Explore options of alliances to ● Work with trade

capital base overcome the issue of high lobbies to increase the
➢ Lack of tangible value assets. positive perception of
assets like ● Invest in collaboration the industry
transportation technologies ● Diversify to focus on
and warehouse ● Work with other 3PLs to Non-EU trade.
➢ Lack of accommodate rising exports to
sophisticated India, China and UK
collaborative
technologies

Appendix G: Professional bodies suitable to SL for marketing

Association Purpose
British International Freight Association An association of more than 1500 freight
(BIFA) forwarder gives a chance to access trade
information, trends and resources like
members training, networking events and
publication (BIFA, n.d.)

CILT Charted Institute of Logistics and Transport

(CILT), headquartered in Corby,
Northamptonshire, is the right platform for SL
to network with potential supply chain
partners like Haulers and warehouse owners.
(CILT, n.d.)
BExA British exporter’s association (BExA) allows
supporting organizations like logistics
companies to be a part of the body. This gives
SL a networking opportunity with over 1000
exporters in the UK. (BExA, n.d.)

London International Shipping Week (LISW) A global networking event marked by the
2019 presence of global maritime companies and
shipping related government departments,
such an event would provide an unparalleled
access to policy debates and discussion
centered on Brexit. (LISW, n.d.)

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Appendix H: Service Blueprint (Shostack, 1984)

Figure H1: Service Blueprint

Source: Self compiled

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Appendix I: Accounting for Salaries
Salaries for FY 2019-21:

£2000 per person X 2 employees = £6,000 per month (Till 31 st March, 2021)

Salaries for FY 2021-23:

£2000 per person X 4 employees = £8,000 (1st April, 2021- 31st March, 2023)

Salaries for FY 2023-2024:

£2000 per person X 5 employees = £10,000 (Till 31st March 2024 and beyond)

Sales function merged with strategizing and management. Therefore, no additional sales
personnel till 31st March 2024, at which point the company expects to exceed 1200 TEUs/
month.

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 Appendix J: Predicted Statement of Profit and Loss (2019-2024)

9 months until
31st March Till 31st March Till 31st March Till 31st March Till 31st March,
2020: Monthly 2021: Monthly 2022: Monthly 2023: Monthly 2024: Monthly
Income Projection Projection Projection Projection Projection
Numbers of 100 TEUs 300 TEUs 500 TEUs 800 TEUs 1000 TEUs
containers per (ongoing)+ 200 (ongoing) + 200 (ongoing) + 300 (ongoing) + 200 (ongoing) + 200
month TEUs (new) TEUs (new) TEUs (new) TEUS (new) TEUs (new)
Margin per £20(ongoing) + £20(ongoing) + £20(ongoing) + £20(ongoing) + £20(ongoing) +
container £10(new) £10(new) £10 (new) £10 (new) £10 (new)
Gross Margin per
month (A) £4000 £8000 £13000 £18,000 £22,000

Expenses

Rent £2000 £2000 £2000 £2000 £2000

Salary
£6000 £6000 £8,000 £8000 £10,000
Marketing Cost
(10%) £400 £800 £1300 £1800 £2200
Professional fees
(10%) £400 £800 £1300 £1800 £2200

Net Expenses (B) £8,800 £9,600 £12,600 £13,600 £16,400

Net Profit per
month (A-B) £4800 (net loss) £1600 (net loss) £400 £4,400 £5600

Tax (17%) £68 £748 £952

Net Profit After
Tax per month £4,800 (net loss) £1,600 (net loss) £332 £3652 £4,648
Net Profit After £43,200 (Loss) £19,200 (Loss) £3,984 £43,824 £55,776
tax per annum

Table J1: Projected P/L

Deducing from the profit and loss statement, the business requires £62,400 worth of working
capital to cover the losses of the first two financial years.

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Assuming a credit period extended to clients for 60 Days, the net margin for two months will
not be received in that Financial Year.

Credit Amount:
FY 19-20: £8,000
FY 20-21: £16,000
------------------------ Total: £24,000

Therefore, a total of £24,000 will not be receivable in their respective financial years. Therefore
this amount is added to the working capital require, to cover all the expenses for the ensuing
period.

Therefore, net working capital required: £86,400

An additional amount of £13,600 is invested in the business for contingency purpose.

Start-up cost = Net Working capital + Contingency requirement: £100,000

It is concluded that SL requires investing £100,000 as the start-up capital in the UK.

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