BTEC level 3 Extended Diploma in Business
Unit 5: International business
Assignment 1: international trade and globalisation
P1: Explain why two businesses operate in contrasting international markets
There are two businesses, which are U.K Companies, both trades internationally. One being
Marks and Spencer's, which had started in the year of 1884. It was first just a stall, and later
the business changed with having not just outdoor stalls but inside too. The business started
to expand. Later on, the company had more stores around the country, the number was up
to 300 stores just in the United Kingdom. The company expanded. So, outlets being in other
countries. Therefore, the stores were now in several different countries. In countries such as
Spain. This company became successful. Compared to what it was at the start, a small stall
which sold needles, cottons, pins and sewing accessories. The two founders, who were
selling items for only a penny. Slowly new shops started to open, a lot of money was
invested so in places such as Manchester, new outlets were beginning to open. During this
period when more stores opened, the war started in which meant that it was Marks and
Spencer's food which was selling and this to from the delivery trucks. Marks and Spencer's
then opened 82 café bars, the food and clothing did really well and later the company
became well known for its products. Trading with so many different countries, focusing on
big countries such as China and India. Places such as Shanghai in China, whereby people will
be wanting to go inside the new store and see what they have to offer. This is good for the
company; they have more customers and likely to work well internationally. They focus
mainly on big countries to trade in where they have more potential. Russia is a good
example, trading
The other business which is, British telecom. This which was founded in 1981 when it was
officially launched. Before this, in 1966 the post office and telecom had split into two
,divisions. When it launched in 1981, it was then separated from the post office. A year later
after that is when BT first introduced their electronic mail service. It was made into a public
limited company in 1984. The company were expanding rapidly. With more things coming
into place. Introducing big button phone, for people who are blind. A fast U.K. growing
company that had also been introduced in India in 1993. This business which now trades
internationally. They operate all over Europe, Americas and Asia, Middle East. Over 180
countries in which BT is operating in. This started off small, working alongside the post office
but then after working alone. The company became successful with introducing more for
people in the country, meeting their needs which made them go international with people
abroad also knowing about the British telecom and what they specialise in.
These businesses both trades abroad, both which headquarters are in the U.K. however
these businesses have become successful over the years and they became known in other
countries. So, from trading in one country and grabbing the attention of the target
audience. Slowly overtime both companies have managed to do trading with many
countries. That shows that first they had to build a target market here in the U.K in order for
them to have outlets in foreign countries. With British telecom, it has been trading in India
for many years, a few years ago it had opened the global cyber security operations centre.
So, the company is improving in all parts of the world. Marks and Spencer’s began trading
abroad after it had opened up outlets in the U.K. later opened in Spain, Germany and China.
When they first opened in England, it was important that they made sales and became
popular so they could then start making deals with other countries. The store focused on
working with one country, then moving to the next otherwise building outlets in several
countries could go wrong if they did not make enough sales. Having international markets
and an online website. It's even easier for people abroad to get access to the products. The
target market is huge, this store doesn’t offer only clothes. It's also for home and sells food.
For countries such as America and Australia it is useful using the online only. Countries in
Europe however have more of an advantage as it is more easily exported to them.
5/A. P2 Explain the types of finance available for international business.
There are a few finances which are there for the international business, for example one is:
, Prepayments by the importer. If companies want to ship items to other countries then the
company or business would need to send a payment early and send it in advance before
they receive their items. Some companies would prefer this method of paying because there
could be a high demand for their products and paying early means the products to be
exported is guaranteed after the money has gone through. Businesses may not sell their
items to just anyone, if they are selling for the first time, they want to be sure that they are
selling to the right people and right business. Now having mostly businesses trading with
others internationally there is a lot of competition and by paying the price beforehand, it
gives the businesses a better way of negotiating. This is helpful for the exporter, he in which
can get the payment before he ships any of the items overseas. By paying in advance, the
importer may be able to get the goods at a much smaller price so that’s an advantage.
Letter of credit. This is the letter of agreement that is made between the importer and
exporter. Instead of paying the payment in advance, the letter of credit is helpful for the
bank and they can monitor whether or not the importer pays after they have received their
goods. This finance is for the importer to send the payment when they have their items with
them after being shipped. The importer signs this and then the busines trade can take place
as they have said they will pay later. The bank will want to make sure of this and chase up if
the importer has not yet paid.
Export credits. When the business has made an international trade deal, they will give the
customer or the importer options when to pay and one of them is exporting credits. This is
where the credit will be there for the customers and they can pay at a set time. This can be
few months to a year after they received their goods. For this to happen, the supplier will
have to be reliable, they will need to have a good relationship with the business who is
setting the pre-set term date for when they will need to pay. There could be an agency
working for the exporting credit, making sure the payment is received by the exporter. If the
country where the business is placed, and that country is not stable they will need to have
insurance so they are definite that the customers will pay at the date where they have
agreed. Marks and Spencer’s offer this option for people to pay interest free credit. Which
means they spread the cost over the course of a few months, and they will receive their
products before they buy.
