Introduction:
This report will be explaining about two businesses that operate in contrasting
sectors. The businesses that have been chosen are McDonald’s, which is a
multinational business, and Wilkin and Sons which is based in the UK but trades
internationally.
An international business is a business that exports their goods and services into two
or more countries. Businesses trade internationally for many reasons. One reason a
business trades internationally is to increase productivity. This is because
businesses that trade internationally are around 70% more productive than
businesses that do not trade internationally (ONS, 2018). As well as this, new
businesses that export become 34% more productive within the first year alone
(BusinessWest, 2016)
Businesses that trade internationally are more likely to survive and be successful.
This is because trading internationally gives businesses access to new markets and
more potential customers, which will increase the amount of products they sell and
profit the business makes. Furthermore, businesses that trade internationally spread
risk in multiple markets, as sales could be declining in some countries, but increasing
in other countries, which will help spread any loss that the business makes.
Therefore, if a business trades internationally, they will not be relying on only one
market, which will decrease risk for the business. This is also important if there are
tax increases in one country or the economy is declining in one country as being in
multiple markets will help protect the business against the market fluctuating. As a
result of this, businesses who trade internationally are 12% more likely to survive
and excel than businesses that choose not to export, according to UK Trade and
Investment (UKTI) (ttc, 2020)
Another reason a business could decide to trade internationally is to extend the life
of the products or services that they offer. This is because, while products or
services might reach maturity in one market, if the business offers the existing
products or services in other international markets the product or service is likely to
be at an earlier stage within the product life cycle (for example, introduction or
growth), therefore more customers will have the opportunity to buy them which is
likely to increase sales of existing products and services. As a result of this, the
,business can still make profit and increase sales without having to spend time or
money on developing new products or services.
Another reason that a business could decide to trade internationally is this could help
inspire the business as to what products and services they should develop. As 48%
of businesses reported that foreign trade has increased their return on investment
from new products and services, dealing with different markets internationally could
lead to the development of different products and services being offered, than those
that would commonly do well in the UK market. (BusinessWest, 2016)
A final reason that a business might want to trade internationally is because this can
help them offer innovative products and services. This is because trading
internationally gives the business a wider range of customers to export their products
to, which will help the business gain a wider range of feedback about their products.
According to UK Trade and Investment statistics, 53% of businesses that the UKTI
spoke to said that a new product or service has evolved because of the business
trading internationally (ttc, 2020).
Businesses that trade internationally benefit the UK. More than half of the UK
economy’s growth is because of businesses that trade internationally by exporting
goods and services to other countries. (BusinessWest, 2016) For that reason,
businesses that trade internationally have a big impact on the UK economy’s growth,
which is beneficial for the UK as economic growth will result in employees in the UK
having higher incomes. Also, economic growth will enable UK consumers to be able
to purchase more goods and services and enjoy a better standard of living. Another
benefit that businesses that trade internationally have on the UK economy is that
there will be a lower unemployment rate as more businesses will be able to afford to
employ more workers. As well as this, an increase in economic growth from
businesses trading internationally will enable the government to spend more on
public services, such as education and health care which will improve the living
standards in the UK and could result in increased life expectancy. Businesses that
trade internationally will also benefit other businesses in the UK, as economic growth
will encourage other businesses to invest in order to meet future demand.
McDonald’s
McDonald’s is an American fast food multinational company, with the first
McDonald’s franchise being opened in 1955. (Business Insider, 2020) McDonald’s
first opened in the UK in October 1974. (McDonald’s, 2021) McDonald’s are a public
limited company as their shares are open to the public, which anyone can buy.
McDonald’s is the world’s largest restaurant chain by revenue and serves over 69
million customers daily in 118 countries, in their over 37,000 restaurants worldwide.
McDonald’s sells a selection of fast-food products, such as burgers, chicken
,nuggets, fries, salad as well as a breakfast menu in the mornings serving breakfast
rolls, pancakes and hashbrowns. (McDonald’s 2021)
McDonald’s purpose is to serve delicious food for their consumers, while offering
their products in convenient locations, with convenient opening hours and affordable
prices. As well as this, McDonald’s wants to offer food quickly, while giving
customers good choice and personalisation. (Corporate McDonald’s, 2019)
McDonald’s sells a selection of fast-food products, such as burgers, chicken
nuggets, fries, salad and a breakfast menu in the mornings. McDonald’s is in the
tertiary sector, as they provide a service to customers by advertising and selling
food. McDonald’s receives goods from over 1,500 farmers in the UK, such as getting
lettuce from lettuce farmers, and therefore McDonald’s do not manufacture their own
products. (McDonald’s, 2021) McDonald’s operates internationally, in around 118
countries with over 37,000 restaurants worldwide. McDonald’s has 1.7 million
employees worldwide and is the biggest fast-food chain in the world. (Business
Insider, 2020) The aims and objectives for McDonald’s is serving quality food that
McDonald’s customers love and trust. McDonald’s also wants to support franchisees
and employees by investing £43 million every year on training and development, and
offering clear career progression. Because of this, 9 out of 10 restaurant managers
and 1 in 5 franchisees started as restaurant crew members. McDonald’s also wants
to support the local community, by leading and supporting a range of community
activities, from litter picking to local football matches, as McDonald’s have supported
initiatives to encourage young people into football for over 10 years. (McDonald’s,
2021) McDonald’s has a divisional organisational structure. This is because the
business organisation is divided into departments that are given their own
responsibilities and objectives. For example, McDonald’s have their own legal
department, customer services department and franchising department (McDonald’s,
2021).
McDonald’s is an importer. This is because they import goods to make their
products, for example, a McDonald’s Big Mac in the UK could have travelled the
equivalent of 8,000 miles before reaching a customer’s plate in the UK (Daily Mail,
2018). While McDonald’s mainly use British ingredients, they have to import some
foods from other countries, such as the Big Mac’s onions from the US and dill pickles
from Turkey. McDonald’s imports their onions from the US as it claims there is no
European supplier that can meet McDonald’s demand for the particular type of onion
(McDonald’s, 2021). Furthermore, McDonald’s also sources some of their beef from
Ireland and sources lettuce from Spain when lettuce is not in season in the UK.
While all pork, eggs and milk come from UK farms, McDonald’s chicken is sourced
from all over Europe, with the UK being the second largest European chicken
supplier (McDonald’s 2021). When trading internationally McDonald’s needs to
consider the cultural difference between the country they are trading to, and any
legal and regulatory barriers that could prevent McDonald’s from being able to trade
with a country. McDonald’s needs to also make sure they have all the required
, documentation involved with trading internationally. McDonald’s is a multinational
business.
McDonald’s conducts business internationally for many reasons. Firstly, being
located in 118 countries increases the amount of revenue that McDonald’s makes as
they can sell to customers worldwide. As of August 2021, McDonald’s is worth $170
billion USD and is the ninth most valuable US brand of 2021. (The Sun, 2021)
McDonald’s opening restaurants in new countries has increased how valuable
McDonald’s is; this is evidenced by McDonald’s value in 2010 being $66.01 billion
USD, which is now $170 billion USD in 2021. Since 2010, McDonald’s has expanded
into countries such as Bosnia and Herzegovina, Vietnam and Kazakhstan
(Wikipedia, 2021) and has increased the number of restaurants they have
internationally from 32,737 in 2010 to 39,198 in 2020 (Statista, 2021). As a result of
McDonald’s expanding their business internationally, the value of McDonald’s has
grown rapidly. As well as this, conducting business internationally has resulted in
McDonald’s increasing their brand value to $155 billion in 2021 (Statista, 2021),
which is a 20 percent increase compared to 2020. As McDonald’s have businesses
internationally, this means that people worldwide will be aware of McDonald’s and
the products and services they offer, as McDonald’s make sure they offer the same
quality, experience and type of foods around the world. As a result of this
McDonald’s will have good brand awareness all over the world. McDonald’s
generates £44 million to £51 million daily, by serving an estimated 69 million
customers each day around the world (McDonald’s, 2021), if McDonald’s did not
conduct business internationally then they would not have access to so many
customers, and would not be able to generate as much money as they currently do
because there would be less customers going to McDonald’s.
Another reason McDonald’s conducts business internationally is for technological
dominance. McDonald’s uses technology to provide a fast service to their customers,
and also owns three technology companies. The first one is Dynamic Yield which
specialises in personalisation and decision logic technology. This is what allows
menus at McDonald’s drive-thrus to change based on different factors, including
weather and current traffic. McDonald’s also owns Apprente which is a start-up
business which is working on bringing voice technology to McDonald’s drive-thrus by
automating voice-based ordering in multiple languages. There is also McD Tech
Labs which is a recently established technology development group within the
McDonald’s corporation which aims to deliver advanced technology solutions that
address real-world, data driven needs in the McDonald’s restaurant environment. As
McDonald’s regularly invests in new technology, such as their start-up technology
businesses, they are able to use this technology internationally to make their
business more efficient and make higher profits globally. McDonald’s having
technological dominance in the fast-food market could also reduce the chances of
new competitors starting in the market, as new competitors are unlikely to have the
money and resources required to invest in new technology like McDonald’s does.
