BTEC Business Level 3: Unit 5 International Business Assignment 2. Distinction criteria met. This Assignment is very well structured with easy to read subheadings and appropriate images. Using this Assignment as your template will ensure you attain Distinction. Please read the criteria carefully b...
Qualification: BTEC Level 3 National Extended Diploma in Business
Unit number and Title: Unit 5: International Business Assignment 2
Learning Aim:
Learning aim C: Investigate the external factors that influence international businesses
Learning aim D: Investigate the cultural factors that influence international businesses
Assignment Title: External factors and cultural differences
P5: Explain the External Factors that influence a selected business considering trading
internationally
In this report, I have selected two different countries that Tesco might be suitable for trading
in. The two countries which I have chosen are North Korea and Iran.
PESTLE on Tesco
Political Factors
Tesco operates worldwide and the biggest influence on the performance of Tesco is global
politics. This can include the legislation acts, tax rates and also the stability of the country in
which it operates in. Due to the current financial instability within the world, the governments
are encouraging the retailers to create more jobs for the domestic population. Tesco does play
a huge part in creating the employment opportunities so it can increase the demand of the
products and also the diversification of the workforce.
Economic Factors
These factors can be the biggest concern points for Tesco as they are very likely to leverage
the profits, prices, demand and also the costs. This means that Tesco should be aware of any
changes within the policies like changes in the taxation of any other factors which can really
affect the finance accessibility. It is important that even when Tesco is growing within
internationally, the company will be really dependent of the UK market where Tesco’s
market share is 30%.
This concludes that the internationalization and also the diversification are two key strategies
which is pursued by Tesco in the past many years. This has led to Tesco making big success
in its market.
Social Factors
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Due to a huge variety of the social changes, there are trends that can indicate whether the
customers in the UK have moved towards one stop shopping or bulk shopping. With this,
Tesco will have increased the number of the non-food items for sale. The type of the goods
and also the services with are demanded by the consumers is very influential especially by
their attitudes and the beliefs which are heavily influenced by the social conditioning.
The customers are becoming more aware of the health issues which has led to their approach
towards the food in change constantly. Tesco has very well adapted to these changes by
allowing for accommodation on the demand of the organic product.
Technological Factors
Tesco have successfully advanced with the use of technology which has led Tesco jump on
opportunities. Therefore, two of the most distinct include the development and the
introduction of the online shopping with home delivery, and also the self-service checkout
points which has provided ease and time saving for the customers. This has also decreased
the labour costs. Tesco has also invested a lot in energy efficiency projects in order to fulfil
the long-term objective to reduce the carbon footprint.
Legislative Factors
Government policies and also the legislations do impact the performance for Tesco. This can
be such as the Food Retailing Commission in 2004 which is suggested a Code of Practice and
should be introduced which can ban many of the current practises such as the way of
changing the prices without notice and also the demanding of payments from the suppliers. In
order to facilities within these policies, Tesco does provide its customer price reductions on
the fuel which they purchase within the accordance to the amount being spent on their
grocery stores.
Environmental Factors
Therefore, with the increase pressure on the companies on the environmental issues and also
to adopt the ways of the operations which can be beneficial to the society, Tesco can clearly
commit on the reduction of its carbon footprint by 50%. Tesco has also been minimising the
waste produces in the stores by increasing the social conscience in the customers.
C.P6 Explain how business support systems enable a selected business to trade
internationally.
Internet – Tesco
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One of the ways internet has fully helped Tesco to trade internationally is through social
media which has helped Tesco to grow and fully expand to over 100 countries and territories
globally. Tesco loves to use social media platforms such as Facebook with 1.7 million
followers, 452k followers on Instagram and 602.3k followers on Twitter. Tesco remains to be
one of the most successful supermarket business within its operations in the countries and is
constantly battling with competitors such as Asda in UK and Walmart. Tesco’s twitter do
post few times throughout the month in order keep the customers or the fan on the latest
deals, stories (Tesco news) and updates. There is no point on posting daily as they are an
established business who serve millions of people each week.
Tesco uses all sorts of E-mail marketing strategies in order to send information of the latest
products and also services to all the potential customer through their E-mails. This is a very
effective marketing technique in order to build good business relationships with its customers
and also their clients. Tesco also did realise that E-mail marketing is the real key to its online
business strategy as email marketing lets Tesco gain as nearly as 60% of its revenue.
Online advertising is also a very effective process of advertising in which Tesco uses smartly
in order to be very effective in its website. Tesco tries focusing on the advertising campaigns
online for the purposes of promotion. This can be such as flower and wine in Christmas and
chocolates for valentine.
Tesco also uses clever Search Engine Optimization which is a very important process in order
lead attraction of internet traffic towards the Tesco website. SEO is very important for the
success of any online business and the better the SEO, the higher the rank in Google of the
website. Tesco.com has joined Bigmouth media for the SEO campaign. Tesco.com does have
a strong vision in order to become the world’s best multichannel retailer. This will lead to
being at the leading position as the largest and also the most profitable online grocery
supermarket in the world.
International Payment Methods Available
International payments methods can help support businesses to trade internationally and
these can include: Letters of Credit, Cash in Advance, Consignment, Open Account,
International Bank Transfers, International Credit Cards and Commercial Payment Systems.
Letters of Credit
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Letter of credit is when the bank of the importer does agree that they will be paying the
supplier as the order is completed. One of the main advantages of this method is when hey
operate internationally, it does acts as like a guarantee or even an insurance in order to reduce
the risk within trading. Normally when a buyer does have insufficient funds for the purchase,
the bank will be stepping in and be required to cover the full amount as factors can influence
things such as the distance, difficulty in knowing the party fully and also the differing laws
within each country. Therefore, there is also a chance to negotiate for more favourable terms
with the suppliers after the letter of credit has been offered.
One of the disadvantages of this method, is that this method is fully operated based on a
documentation, but it is not based on the physical verification of the goods. This can lead to
mistakes being made when preparing the letter of credit and the business need to make sure
they do not let someone who is inexperienced or not knowledgeable enough to be handling
their finances or even to settle any of the legal disputes as things can really go wrong easily.
Tesco will not be using this method as they already have generated a lot of revenue in order
to repay the suppliers on a standard current basis. However, if Tesco do ever manage to be in
debt, they can use this method in order to repay its suppliers.
Cash in Advance
This is a prepayment when a business or the individual is looking to pay in advance and settle
any of the debts, they are fully liable for and this can be paid either in full or in instalments as
long as it is paid before the date. The prepayments can be involved in a complete balance on
the liability or even a future payment that a borrower will be obliged to repay.
A great advantage to cash in advance method is that the customer can negotiate to be
discussing the prices of the item or even the service but only if it is in a high demand, or they
will not be able to debate at all.
A disadvantage of Cash in Advance is if the suppliers is a small business are limited to where
they can able to ship the product as due to the high delivery costs and also considering the
factors if the customer even trusts them and if they are even likely to purchase the item.
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