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Explain why two businesses operate in contrasting international marketsThis report looks at the reasons two businesses namely Greggs and Rolls-Royce PLC operate in
contrasting international markets, the types of finance available to these businesses in their international
pursuit, the features of globalisation that could affect these businesses and explore the role of trading
blocks on international trade. Further, the report analyses the support that is available to the named
businesses, the barriers to trade that could impact their international operations and evaluates the impact of
globalisation on one of the businesses considered.
Greggs is freshly prepared food that customers can trust at affordable prices, whilst Rolls-Royce PLC is a
major British manufacturer of vehicles. Greggs is in the food sector whilst Rolls Royce is in the mechanical
sector and both of their purpose is to make profit by pleasing customers wants and need. Both are a large
organisation with 250+ employees and operate in developed economy.
The biggest advantage that developed economy have on companies such as Greggs and Rolls-Royce
when operating internationally is high investments, which can provide those businesses with funds to
support their international operations like expanding or diversifying for them to gain higher rewards such as
profit or brand awareness. However, with higher rewards comes higher risks as developed economy have
too many well-established businesses that will likely attract more investors, or make it difficult for
companies like Greggs and Rolls-Royce strive in that particular market due to those businesses already
having market dominance. When a business operates internationally, they can diverse their assets like
capital from one market to another, as a precautionary method for them against unexpected events such
negative growth in one market due to external factors like a pandemic. They can avoid this by operating in
another market. For example, Samsung diversifying from a phone market to a fridge market to increase
their revenue. If a business utilises their investment successfully, then they can grow their brand name on a
global scale, due to this they can increase their market share, which will enable Rolls Royce and Greggs
to take customers away from foreign competition by using their established brand, products and services.
The successful use of a business investing their investments into the right sector of their business such as
production or workforce, can play a critical role of how dominate a business can become in a market, as the
business can gain a competitive advantage in promoting and advertising to large audience.
Another advantage that developed economy have on companies such as Greggs and Rolls-Royce when
operating internationally is preferential tax rates, this allows businesses to pay lower corporation tax
based on the country they operate in. They can even avoid paying tax in high taxations country that they
receive revenue from. On the other hand, most developed economy countries will raise taxes on well
Unit 5
,established businesses like Greggs and Rolls Royce as they can afford to pay that amount of tax due to
how much revenue they generate.
P1 Bibliography
https://corporate.greggs.co.uk/sites/default/files/2012%20-%20Investor%20Day%20Presentation%20-%20October%202012.pdf
https://royceglobal.com/markets/
https://www.investopedia.com/taxes/countries-highest-income-taxes/
P2: Explain the types of finance available for international business
BP is one of seven major oil and gas companies in the world now operating in over 70 countries to produce
3.6 million barrels of oil a day.
Bank loan is a traditional style arrangement, with businesses borrowing directly from financial institutions
such as a bank to import products. Loans will have interest added on, this tend to be at a fixed rate over a
specific period of time. BP uses bank loan to help pursue their financial aims and objective such as
international expansion or diverse into another market.
Export credits is a financial support or guarantees that are given to foreign business to help in buying goods
or services from UK exporters. These are often provided by financial institutions or export credit agencies;
they might also be provided by the exporter themselves in order to create a good relationship between
them. This can apply to BP as they operate in over 70 countries so their goods must be transported to other
countries to make a profit.
Identifying international partners can be created between organizations of the same level, these might
include overseas manufactures and suppliers that have greater product expertise or understanding of local
markets. This can apply to BP to establish partners that can increase BP business activities like expanding
international market and establishing well-known brand name.
Letters of credit is a bank guarantee that the seller of a product will receive an agreed payment from the
buyer, this provides security for both parties and transfer the risk from the seller to the bank. This can apply
to BP as they trade and sell overseas, therefore a letter of credit ensure safety between both parties whilst
operating international.
Unit 5
, P3: Explain the main features of globalisation that affects two contrasting
businesses
BP plc is a British multinational oil and gas company headquartered in London, whilst Rolls-Royce PLC is a
major British manufacturer of vehicles. BP PLC operate in the oil sector whilst Rolls Royce is in the
mechanical sector, both of their purpose is to make profit by pleasing customers’ wants and need. Both are
a large organisation with 250+ employees and operate in developed economy like in Europe and America.
Globalisation is the process by which businesses or other organizations develop international influence or
start operating on an international scale, the main features of globalisation may include:
International currencies which is the currency such as the US dollar and the Euro that is commonly used in
trade between different countries. This can affect businesses such as BP and Rolls Royce because the
exchange rate is different in the countries in which they operate. For example, Rolls Royce selling their cars
in China, therefore the profit generated or traded for by a business can decrease or increase depending on
the value of a country's currency vs. that of another country or economic zone.
Multinational corporations are large companies with operations in several countries across the world such
as Apple and Google. This can affect businesses such as BP and Rolls Royce because their goods or
service can be extremely popular and desirable for customers in one country than it is in the other,
therefore making additional profit. Another reason will be that they can place their main base of operation in
a country with low taxation rate that benefits the company as they can pay less tax. For example, Rolls
Royce main base is in the US, as a result reducing the outflow of cash that the business would have to pay.
International business communication is a branch of communication studies that is concerned with the
scope of government-to-government, business-to-business and customers-to-customers interactions at a
global level. This can affect businesses such as BP and Rolls Royce as the business can have good
international communication that can help maintain intricate business deals. For example, BP branching out
to the scope of customers-to-customers communication in the US to review any ideas that they can add to
their company. Bad communication can cause loss of businesses and even international tension among
countries.
International payment system is a global payment system that settle financial transactions through the
transfer of monetary value like goods or services. This can affect businesses such as BP and Rolls Royce
as it allows them to pay overseas without issues like exchange rate or security. For example, BP paying for
the despatcher of oil to one of their international firms in America from the UK.
P3 Bibliography
https://bizfluent.com/info-7761139-importance-communication-international-business.html
Unit 5
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