This is the BTEC business Level 3 Unit 5 assignment 1 Learning aim A&B
this assignment covers all points including the following:
P1- Explain why two businesses operate in contrasting international markets.
P2-Explain the types of finance available for international business.
P3-Explain the...
Unit 5 international business Learning aim A and B
P1
International business is the exchange of goods, technology, services, capital
and additionally information across public outskirts and at a worldwide or
transnational scale. International business also includes cross border
transactions of goods and services between two or more countries.
International business can also be referred to as Globalisation.
There are types of activities that a business can carry out when working on a
global scale which include:
Exporting businesses- Sell goods and services to other countries
Importing businesses- Buy goods and services from other countries
Multinational enterprises-Export and import goods and services
between a range of multiple countries.
Associated businesses- These are businesses that help other businesses
that operate in the export/import market.
The reasons why certain businesses operate internationally can be because of:
growth, when a business grows it has the potential to operate in many
areas and also reach out to more people.
Other reasons can include additional revenue streams from different
countries, brand exploitation to reach more and new customers
worldwide
The increase of market share to surpass rivals and competition which
can be linked to market leadership
Technological dominance in terms of being able to access and use new
tech and machinery that may not be available in certain places that will
be used to deliver better products in terms of production.
Economies of scale, as the business grows its marketing will be noticed
more by the people and it will have greater financial power.
fiscal benefits, Exporters can receive government financial help in the
form of grants inn order to develop trades in other countries.
preferential tax rates, multinational businesses can have access to lower
corporation tax rates if seen to be based in other countries. They can
avoid paying tax in the country that they received the revenues.
, Operating internationally will also gain access to new markets, a
business can build sales in a variety of different markets, building on its
established understanding of its product.
The different types of markets in which a business can go into/operate are:
1. Less developed countries.
Less developed countries (also known as LCDs) are seen as a source of cheap
production in terms of how much money a company will need to pay in order
to gain raw materials as well as labour. This gives the business a competitive
advantage in the market they can pursue a cost minimisation strategy. This
improvement can allow the business to reduce prices to either increase added
value.
2. Emerging markets
Emerging markets are economies of a developed nation that are slowly
becoming more engaged with global markets as they grow to meet standards
to be a developed market from a low income, less developed and often pre-
industrial economy towards a modern, industrial economy with a higher
standard of living. These markets conclude of 44% of the world’s population,
this means that there is a very huge potential of audience for many businesses
to target but usually in more affluent areas which have a higher proportion of
richer individuals.
3. Developed countries
Developed countries have high standards of living and well-developed
infrastructures. This makes them easier to conduct business with a better
transportation and communication system. This will reduce the cost and the
time taken to trade. Higher GBP also ensures that individuals living in the
country have the ability to be able to purchase high quality products. However,
there will be many competitions in these markets.
, Factors influencing choice of market
The type of product being sold
The type of products being sold will depend on the amount of income of the
markets. So, for example LDC’s are likely to have less income/expenditure so it
is likely that they will demand for lower priced items for purchase.
The emerging markets and developed countries will have a higher income and
therefore demand/look for higher quality products.
Costs
Costs are very important to businesses; it makes an impact on where a busines
swill locate. For example, markets such as “China” will reduce transport costs
and also give permission to businesses to operate in free trade areas, this
lowers custom duties.
The size of the market
The size of the market is important when choosing and considering which
countries to target, for example the UK traditionally exported to the USA as
well as targeting many other countries such as china, India and many more due
to their rapid increase in GDP and great populations. It is important to be able
to operate in these markets because establishing a customer base will allow
businesses to build a strong brand recognition as well as increase their market
share.
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