Essay
Unit 39 P1
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Essay of 4 pages for the course Unit 39 - International Business at PEARSON (Unit 39 P1)
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IntroductionFor this task I am required to explain the international business environment in which Tesco
operates and will prepare a report that outlines the benefits of international trade. I will also
explain how Tesco can benefit from and grow as a profit-making multi-national company.
Value of international trade
Firstly international trade refers to the exchange of goods or services along international
borders. This type of trade allows greater competition and more competitive pricing in the
market. The competition results in more affordable products for the consumer. The exchange
of goods also affects the economy of the world as dictated by supply and demand, making
goods and services obtainable which may not otherwise be available to consumers globally.
Tesco is a well-known British multinational grocery and general merchandise retailer. It has
stores in 14 countries across Asia, Europe and North America and is the grocery market
leader in the UK. Currently, Tesco hold 30% of the market share.
Trading in the UK is important because the UK is an open economy and rely on trading
overseas a lot. If international trade occurs within the UK at a high rate and everything runs
fluently this would bring more money into the country and when other countries see this they
will want to internationally trade within the UK as well as others. With international trading
comes the opportunity to get a wider variety of goods and services and this is a good thing
because goods and services can be bought at cheaper rates because the currency in other
countries may be quite weak. For example, foreign labour can be brought over legally and
can work at minimum wage because that would be good enough for them and they’d love to
have that opportunity because they would earn more than they do in their country. This would
also have a positive impact on poor countries that the UK are trading with because from the
money that we are paying them they should be able to break out of the cycle of poverty.
Clearly international trade has worked for Tesco in 14 countries across Asia, Europe and
North America and is the grocery market leader in the UK (where it has a market share of
around 30%), Malaysia and Thailand. This shows that they did deep research into how they’d
adapt themselves to different cultures and areas because if they didn’t look into these things
they wouldn’t be as successful as they are in thrive in these areas. At one stage Tesco
attempted to bring their business overseas to the US however it didn’t work. This idea didn’t
work because even though they are a well-established company and know worldwide they
had massive rivals that were already established in America such as Wal-Mart, Costco’s and
many others. So this resulted in them having to close up the business because there was no
point trying to keep it alive if it was receiving no business and wouldn’t be able to make
profit.
Benefits of trade
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