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UNIT 5 INTERNATIONAL BUSINESS LEVEL 3
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Unit 5 International Business
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UNIT 5: INTERNATIONAL BUSINESSAPPLE
Explain why two business operate in contrasting International markets.
In this assignment I am going to be talking about two businesses. Apple and Tesco. These
businesses are both operating in a contrasting International market.
Apple is an American multinational technology company which was first founded on 1st
April 1976 by Steve Jobs and Wozniak Ronald Wayne. Apple designs and markets
electronics.
Apple is a Public limited company. A public limited company is a business owned by
shareholders, members of the public and investors. Because Apple is a public limited
company it has limited liability meaning that the if the company is being sued by a
customer, they would only lose money that they invested into the business and nothing
else.
Apple is a Multinational Company (MNC) which is a business that operates in more than
one country. By becoming a multinational country this creates a good relationship with
other countries and creates a good name and becomes a dominant brand in each country.
1Apple is focusing more on emerging markets. An emerging market economy is a developing
nation that is becoming more engaged with global markets as it grows.
Apple trades internationally they do this to acquire resources and expand and grow the
business. The benefits of trading internationally are that is decreases the amount of
competition. The competition may be crowded in your business home market by going to
other countries you may find less competition. Which may make the business become a
dominant brand in other countries helping it to be well known. Another benefit of trading
internationally is that there will be an increase in customers as your business expanding to
many different customers the amount of clients your business has will increase meaning
that the business will grow, and the revenue will increase.
Explain the types of finance available for international business
There are four methods of finance Prepayment, Letters of Credit, Export Credits and Bank
loans.
Prepayment: Firstly, Prepayment are the amounts that are paid by a business before the
goods or services have been received. Prepayment can be very beneficial for Apple because
it gives the seller peace of mind as they know the money has been paid. Unfortunately,
there are some downsides to prepayment which are that the buyer pays before they are in
ownership of the goods/products which means that they may be cash flow problems for the
buyer. Also, there could be many problems for the buyer if the goods are not sent.
, Bank Loan: A Bank loan is when a bank offers to lend money to the consumer for a period.
There are many benefits for Apple when it comes to using a bank loan for example the set
payments are spread over a period which is very good for budgeting. But when it comes to
bank loans, they may be a few disadvantages for Apple for example your business could
have trouble paying the monthly repayments if your customers are not paying you on time
which can cause cash flow problems.
Letter of credit: A Letter of Credit is a letter from the bank guaranteeing that the buyer's
payment to a seller will be received on time and for the correct amount. Apples advantage
of using a Letter of Credit is that it is useful when information about a foreign buyer is not
freely available. But also, there are disadvantages for a letter of credit is that it can become
quite expensive because the bank charges a fee for providing this kind of service.
Export Credit: Lastly an Export Credit is a credit loan given to a person or company who has
exported goods while they wait for the payment from the buyer. An Export credit is mainly
used when it could be too risky to finance in a normal way. It’s generally used in a less
developed country and emerging markets.
When it comes to method of finance Apple could use Letter of credit. A Letter of credit is a
letter from the bank guaranteeing that the buyer's payment to a seller will be received on
time and for the correct amount. There are many benefits when it comes to Apple using A
letter of Credit for example is that the buyers are certain to receive the goods they paid for.
Another benefit of letter of Credit for Apple is that the sellers are protected against non-
payments form the buyer. The downsides of using Letter of credit as your method of finance
is that its very time consuming which could anger buyers.
Apple may use Letter of Credit mainly because it gives security to both the seller and the
buyer. This also gives both the buyer and the seller a peace of mind as the seller knows they
are getting the money and the buyer knows it's on it way with the proof of the letter of
credit. Apples uses it as its very efficient despite the consequences.
1:https://www.businessinsider.com/apple-focuses-more-on-emerging-markets-2016-
12?r=US&IR=T
Explain the main features of globalisation that affect two contrasting businesses
Globalisation is when countries become more closely integrated and interdependent.
Globalisation has many different features such as Free movement of Goods and Services,
Free movement of Labour and Free movement of Capital.
Free movement of Labour: The first feature of Globalisation is the free movement of labour
which means that people can freely work in many different countries. This characteristic is
very beneficial because it can help prevent the shortage of labour. There may be many jobs
that people would not like to do whether that be skilled or unskilled kinds of jobs. 1The
immigrants that are in that country will fill in the gap and ensure that there is not a fall in
labour productivity as countries may sometimes witness shortage in labour. However, this
characteristic of globalisation may also lead to downsides for example developing countries
may lose highly skilled workers. Workers from developing countries may migrate to
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