P1 / Explain why two businesses operate in contrasting international markets.
Apple Inc. is a global organisation that manufactures and produces consumer electronics,
computer applications and personal computers. The firm is widely known for its Macintosh
range of laptops, iPod, iPhone and iPad.
Paddy plc is an English international food and general goods retailer headquartered in
Hertfordshire, United Kingdom. It has established itself as the third largest retailer in the
world, calculated by sales, and is the industry leader for grocery stores in England.
Exporting business – Exporting business is a business that exchanges the stocks of products
and services in a nation that is not of origin, an illustration of this may be that if the
company were to sell computer sets that were manufactured in England and if the company
were to export computer sets to another EU country for sale. A positive advantage will be
that company selling goods would be willing to take a peek at business prospects in other
territories or other nations.
Multinational companies – a business that works in a variety of countries but is operated
from the country of origin. Typically, any company that receives 1⁄4 of its income from
activities beyond its country of origin is recognised as a global cooperation.
Related companies These are typically firms operated by another corporation. Importing
industry – is an enterprise that purchases goods from other nations and utilises items to
trade in its own market. The beneficial effect of this is that the corporation would be willing
to trade goods that cannot be found in their country of origin.
Paddy is an English-based food retailer and general goods retailer. The business is England's
largest supermarket sector with a market share of 27.7% and has since grown to eleven
other countries across the globe. The international expansion plan of the company has
generated a solution that is responsive to local demands in other countries by approaching
joint projects with local partners, such as Charoen Pokphand in Thailand, which will allow a
very large proportion of local management workers.
China is quite interesting for apples, as if you were looking at apple development, as apples
are still doing business, as the company uses the Chinese supply chain for all its goods
internationally.
The company has opted to trade globally as the UK's largest retailer and it has had amazing
success in its home market thanks to all the revenues it has accumulated during the last few
years and it has the power to grow since the company has also decided to work abroad
when it has seen a potential to satisfy the demands of its consumers and draw more
customers than it already has in England.
Aim of conducting business abroad
,Tax cuts: a beneficial advantage for multinationals is that they will cherish lower rates on
imports and exports in various countries, the beneficial outcome of this being that
shareholders of foreign companies can at every given moment, though not every country
can have lower duties, although there are still those that tax investors to encourage
international firms to do business in those countries.
Work making: Multinational company establishes subsidiaries in other countries, workers
for imports and exports. The beneficial benefit of this is that more individuals are offered
chances to function. Cheaper Labor: the advantage of a foreign company is an opportunity
to work in places where labour is cheaper than average. This is the advantage that bigger
companies don't want.
Large Market: focused on opening up establishments in various nations, multi-nationals
expand their potential to reach out to customers across the globe, a benefit that other
companies restricted to regional establishments do not have, since the willingness to have
connections to more clients would offer them more opportunities to build and provide for
their businesses that will satisfy the needs of clients.
P2 Clarify the forms of funding available for foreign company
As Apple and Tesco are foreign companies, they need to learn of how to handle financing in
their businesses to support their firms. International company may display funding of its
business in 4 separate forms based on the circumstance in which it can wish to select one
option over the other depending on which method better fits it.
Letter of Loan
A business wants to provide a trade deal with its team, since confidence is important
between buyers and sellers, since there is a high chance of taking abuse of trust, which is
why a letter of credit allows this negotiating phase at a lower risk a letter is essential, since
there is an importer and an exporter who needs clarification in order to exchange this
knowledge as his instrument with a bank the gua. A letter of credit is typically used when
buyers and sellers don't know each other too well, and hence it is mostly used in foreign
exchange for finance products. Significant detail about the certificate of credit is that, if
there is a misapprehension of the contract, the contract will be void before the letter of the
contract has been fixed.
Positive result
The beneficial advantage of employing this approach is that the customers are likely to
obtain the products they have agreed for, since it will be a reported violation of contract for
the vendor not to comply with the contract, which may result in a legitimate contract being
entered into. Another good consequence of this will be that the buyers are covered from
, non-payment by the purchaser as the consumer may not meet with the contract and the
bank does not finance the payments, as this could be a violation of the contract.
Negative consequence
The contract is focused on the paperwork and not on the direct inspection of the products
for the customer, which implies that the contract explains the goods that you are expected
to look at, however you cannot see the real goods in person. There is a high negotiating
price for the exporter.
Export Credits
Import credit means when a company that offers products to you asks you to purchase
queries regarding purchasing your items and paying for them later. This method allows firms
to buy a certain amount of time to pay back and save money transferred between the two
companies. Export Credit Agencies shall allow a business to bargain with the vendor to offer
protection with a quality warranty that the product is received. Generally, companies like
this are typically utilised while a country consumer is trading with a politically troubled
country. Furthermore, there is a greater risk of not getting merchandise when they have
sensitivity to what items and services are up to date with funding, and they have very
stringent guidelines, which ensures that they obey clear protocols to guarantee that
everything goes to schedule.
Positive result
Helps the company to expand comfortably into new markets by ensuring that you will be
paid.
Export credit will help reduce the cost of management, helping you to conserve resources
and concentrate on what is important.
Negative consequence
Insurance providers can not cover those kinds of products, which is why the insurance does
not cover the whole shipment. They do not sell such forms of products to certain countries
from which your business purchases them.
Credit Lending
Bank loans will rely on your deal with your bank, based on the form of loan available and
needed by your corporation, which will also focus on the nation you are importing from,
which banks know of the type of sector your business is. It doesn't only rely on these things,
but also on the present arrangement with the bank, and on the kind of account you have
with your bank, so your financial background would have a major effect on the amount of
cash you receive, and if you have a really poor credit history, you're not going to get big
loans or a loan at all, so the bank would perceive you as a potential risk of not paying them
back.
