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Unit 5 International business assignment 1
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Unit 5 assignment 1Why trade internationally?
Introduction
I am writing this report because I wish to understand why the majority of businesses like Tesco,
Waitrose and Nestle would be willing to trade on an international scale in different, developing
countries such as Pakistan.
Summary-
I shall explain the different reasons why my two, chosen businesses may decide to trade
internationally in the next following section of my report. My two chosen businesses are Tesco PLC
and Nestle because, I think these two businesses are contrast to each other. I shall compare each of
these two businesses and I shall give reasons for conducting business on an international scale. I
shall explain the methods of financing the international business and I shall also explain the link
between my selected businesses; for the process of globalisation. I shall also explain this link to the
international trading blocs and the types of support for the international business. I shall explain the
barriers to the international business, and I shall also evaluate the impact of globalisation upon the
two selected businesses.
Exporting businesses
Exporting means when the business in question is “able to produce a good or service in its original
country” then, “ the business would be able to sell these goods and services to their other customers
such as other well-recognised businesses who can possibly be within another country or to other
interested customers” (businessgov,2023). These exporting businesses can “export different types of
goods and services” because this concept depends upon the type and size of the business itself. Due
to this, the businesses such as Tesco can export specific “goods and services” such as “online goods”
through the usage of their online website which is known as “www.tesco.com” (Tesco,2023). Tesco
offers a “range of different products and services in order to meet the needs and wants of their
customers" as, an example can be their clothing line which provides different types of clothing for all
ages and regardless of all social-economic backgrounds such as for the more affluent customers
(tesco,2023). Therefore, this can also mean that Tesco has to apply and meet all of the requirements
and the criteria set by the consumers such as a “good and cheap quality food that’s accessible for
everyone regardless of their own capabilities”.
Another example of an exporting business can be Waitrose which exports their goods and services
on an international scale. Examples can include the UK, Asia and America which can include some
developing countries. “Waitrose is able to tailor their target market’s individual needs by offering a
diversification of a wide variety of different products and services in order to meet their customers’
needs and wants. Waitrose hasn’t changed its slogan so it is a widely, internationally recognised
brand since, the language barriers hasn’t impacted Waitrose’s slogan at all.
Importing businesses
Businesses like to import their “goods and services” through different means (businessgov,2023). An
example of importing businesses can be Tesco because, importing means when a “business is able to
“bring their products and services into a country in order to, be sold which has been produced
elsewhere such as made in China “(shoptify,2023). Tesco is known as an importing business because,
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,Tesco is able to produce their clothing line in a different country to the UK due to the low expenses
that can incur instead of paying high costs when producing these products in the Uk due to high
labour costs. These high labour costs are caused by the minimum living wage in the UK only which
must be paid to their employees because, Tesco must become a lawfully acting business by following
these laws and regulations in different countries such as the minimum living wage; this depends
upon the employee’s age and qualifications in their life. Therefore, if Tesco didn’t import their goods
and services then they would suffer financially in the short and long term due to external factors
such as conflict or a recession in their country that would produce their products and services then,
this would also reduce the chances that Tesco’s ability to produce and sell their own goods; services
to their target market of young families.
The Brexit situation
Brexit means when the “UK has left the European Union” and it is a known as “Britain and Exit which
are combined” (governmentofnetherlands,2023). During “2016 the majority of the Uk residents
voted to leave which was approximately about 51.48% so the Uk left the EU in January 2020”
(governmentofnetherlands,2023). The situation now is that the “UK and the EU have negotiated
their new relationship in terms of their Trade and cooperation Agreement” because some
businesses that are Uk based may require to trade to the EU due to the high demand of their
consumers (governmentofnetherlands,2023).”By the end of January 2021 these rules shall become
in place” and these rules affect Uk businesses’ trading solely situated in the European Union
(governmentofnetherlands,2023). The examples of affected businesses shall include Tesco and
Nestle because, these are businesses that operate on an international scale and are regional;
nationally. These businesses are UK based but they offer their services and products through their
online websites in order to attract more customers and to increase their sales revenue dramatically
by producing a higher net profit margin.
“Brexit can prove to be an immense challenge for the UK and EU alike but both of these countries
have different businesses who may trade internationally who shall become impacted by the Uk
leaving the EU”(Zimmermann,2019). This can create many “consequences for their international,
trading businesses like Tesco because, Brexit creates many different challenges for Uk in terms of
their external trading to the rest of the world” (Zimmermann,2019). This example illustrates that
“UK shall become impacted because, Brexit affects their international relations with other countries
outside the Uk such as Spain” (Zimmermann,2019). Therefore, this can also create further problems
for UK based businesses that trade on an international scale because, there would be specific rules
and regulations if they choose to sell their services and goods to the countries within the EU”
(Zimmermann,2019). This has been caused by the fact that “EU has a huge and vast network of
different preferential trade agreements that the Uk based businesses like Nestle must comply to
completely in order to become a lawfully abiding business in the Uk and in the EU as a whole”
(Zimmermann,2019). So far, “ the effects of Brexit upon the UK are unknown but many researchers
are determinating that this will affect the UK based businesses such as Tesco to have any ability to
sell their goods and services on an international scale because these businesses would have to
become certain to follow the different rules and regulations from a variety of different countries like
China” (Zimmermann,2019).
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,Figure 1 (Ville,2019)
Multinational entreprises
Multinational enterprises means when there’s an “enterprise that can produce products and
services in different countries that are producing them in more than one country” (eurostat,2019).
By doing this, these multinational businesses also known as “MNC or MNE” and they would have a
“home country where their headquarters would be ; they would have a host countries where the
business can operate in different countries by abiding to their laws and regulations” such as the
minimum living wage for everyone (eurostat,2019). An example of this can be Tesco which is known
to be a multi-national or global business because they have a wider scope of their operations across
the world but not in all developing countries like Vietnam. The figure below shows how Tesco is
doing currently after being based in majority of countries because, they offer a diversified products
and services in each store with some bargains and discounts on food and drink ; this encourages the
target market to purchase more .Henceforth, causing a detrimental effect upon Tesco’ sales revenue
over the following months between February 2022 to January 2023 as depicted by the graph. Also,
Tesco is not just a business but, it is known as a “PLC which stands for private limited company”
(reuters,2023)
Figure 2 (reuters,2023)
Associated businesses
Associated businesses is a business term which means when there’s a scenario where “ businesses
can give their own support for other business by either providing them with services or by forming a
partnership by working together as one, big business”(Phillips,2017). This can potentially mean that
these “businesses can help other business with their own problems with their international trading
because they can offer a range of different services to provide these business with the expertism
that their businesses may acquire” (Phillips,2017). “Examples of what services that associated
businesses can provide is Logistics and Marketing” (Phillips,2017).
The main example of an associated business that I wish to discuss is called a GBS Freights because,
this GBSF can offer services to these businesses which may acquire additional help or support for
their international trading problems. GBSF offers specifically a “service which enables other
businesses to have their goods to be moved for them” on an international scale in exchange of the
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, business’s finance (Phillips,2017). The “movement of goods across different countries can be shown
more coherently by the figure 2 below which shows where their business can move their goods
between specific countries like South America to Australia by either land or sea”(gbsfreights,2023).
GBSF offers their “target consumers such as international, trading businesses a service to transport
their goods or services by either shipping, boats or trucks” (gbsfreights,2023).
Figure 3 (gbsfreights,2023)
P1- Reasons for conducting business internationally
My two, contrasting businesses that I have decided to discuss throughout my report is Tesco and
Nestle.
Tesco
1)What the business does?
Tesco PLC is a business which based in the UK and in other countries around the world by the form
of international trading. An example can be where Tesco offers their goods and services within the
Uk and amongst other countries such as “India, Malaysia and Thailand” (Kar, Bansal and
Mistra,2021). By doing this, Tesco is likely to meet or achieve their smart objectives or their aims “ to
expand their business on an international scale in order to increase their sales revenue which in turn
shall boost their sales revenue in the future”; this is also known as their business’s objectives (Kar,
Bansal and Mistra,2021). Therefore, this implies that “Tesco is not avaliable in all countries around
the world because there were severe issue that couldn’t be resolved in some countries such as
Malaysia and Thailand” (Kar, Bansal and Mistra,2021). Further “evidence of Tesco’s success can be
shown in figure 4 which shows how their profits would have changed from 2015 to 2019 by offering
their services and goods on an international scale outside of the Uk “(Kar, Bansal and Mistra,2021).
Financial Statistics (£m) 2015 2016 2017 2018 2019
Sales
UK & ROI 38,228 37,189 37,692 38,656 44,883
Central Europe 6,186 5,268 5,977 6,343 6,030
Asia 4,492 4,447 5,186 4,947 4,873
Tesco Bank 947 955 1,012 1,047 1,097
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