Unit 5: International Business (100% Distinction*) BTEC BUSINESS LEVEL 3
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Course
Unit 5 - International Business
Institution
PEARSON (PEARSON)
2024 Unit 5: International Business (100% Distinction*) BTEC BUSINESS LEVEL 3 EXTENDED DIPLOMA. Distinction* approved. All learning aims, detail explanations. Worth buying it.
Introduction of international business
International businesses refers to operating, sending, and transaction between
companies from different countries. Some businesses export and import their
products into multiple countries by not limiting to a specific currency in order to get
profit. Some businesses such as Tesco require accurate approval and export
declarations through the National Export System (NES) in order to import and export
to third countries and the EU. They must use it as an exporter to state their purpose
to export their goods to a third country and to pay VAT, import duties and taxes in the
destination country where needed to ensure they follow with shipping procedures.
International business has a huge impact on the national economy. It takes place in
an internationally competing environment involving small and large enterprises.
Companies that make businesses internationally have to consider several factors.
Governments can affect global businesses for the advantage of the national
economy. Countries join the international trade union to support and protect
international business.
Many international businesses has been affected by covid negatively and positively,
some global markets are gone up such asTesco, sainsbury, Asda, lidl, and morrisons
due to the fact that the people were more likely to do online shoppings, specially
people were stocking the grocery, this influenced positively on all these markets to
increase the e-commerce platform and to increase their sales dramatically with the
help of covid-19. Moreover, the most benefited company that had a positive impact
of covid was microsoft because people were doing work from home and microsoft
was in use all over the world, they earned $168.088 billion in 2021 . However, some
global markets has been fallen down down such as Ikea because people were not
able to go to the store and purchase furnitures without looking at the quality as well
as Tesla sales dropped due to people were not able to go to Tesla showrooms to buy
cars as well as the supply chain of Tesla decreased due to their 40% of tesla
production come from china and they produced less production due to shutdowns.
Language is one of the barriers for the businesses who are seeking to expand their
businesses internationally. Some businesses have to face issues with suppliers and
partners to communicate with them which results in menace their businesses
abroad. Also Brexit changed the international markets such as Nike suspended their
reuse recycling scheme in the UK resulting in demanding high costs from customers.
Two contrasting businesses such as Nike and Tesco were negatively affected by
Brexit as Tesco was unable to deliver products to Northern Ireland which caused
disruption in their revenue and market share. However on the other hand Nike wasn't
affected as much by Brexit because Nike is an American company which operates in
worldwide countries. Brexit affected the trade as Uk bought products from EU
constantly declined by 25% which affected the trade union between EU countries
and UK.
,Moreover, natural disasters impacted the stock deliveries to the international markets
which resulted in receiving less supply chains. Some businesses recover their losses
by having insurances but some companies are unable to recover their losses due to
unexpected conditions. Floods, natural disasters, drought influence on agriculture
trade Countries like Pakistan had to face unexpected flood in villages where most of
the wheat, sugarcane, cotton, etc are located, Pakistan unabled to export all these
agricultural products to other countries which was a huge crisis for countries
internationally and nationally.
In addition, interest rate and inflation are one of the biggest issues countries have to
face which make the economy fall down and go up. Several emerging economies,
such as Brazil and Russia, have taken action to keep inflation in check by raising
interest rates, a measure that puts a further squeeze on consumers by raising
borrowing costs.
Multinational Enterprises
Multinational businesses are those that operate in more than one country, and can
often operate in a number of different markets globally. Businesses such as Nike and
HSBC operate in more than one country in order to expand their business. They
import and export their products multinationally as they have to follow different rules
for importation according to the different countries by paying duties and obeying the
laws. HSBC origin country is Hong kong and Nike origin in US which are their home
countries but they also operate in other countries.
Associated businesses
These are the businesses who do partnership with other businesses by offering them
to work in partnership which means if two businesses collaborated and worked within
a partnership so the one person and the one company has the control over the other
company. For example Nike has the ownership over Jordan, Cole hann, Harley,
umbro and datalogue, etc which shows that Nike is the associated company which
means they have to share their profits. On the other hand HSBC is not associated
with any company, they have different branches all over the world which makes them
associated with the world and the customers.
Reason for conducting business internationally
Conducting business internationally offers a lot of different opportunities for growth
and development and may not be possible from working in the UK alone. For
example Nike is a United states company that is one of the world largest athlete
apparel companies which benefits continuously from international business activities.
The reason why businesses conduct their businesses internationally is because their
diversification increases which results in huge market share. The reason why HSBC
conducts their business internationally is due to it promotes positive social outcomes
through boosting local economies development. Trading business internationally is
beneficial for HSBS and Nike as it increases the business growth, makes additional
, revenue, brand exploitation, access to new markets, diversification, increasing
market share, market leadership, technological dominance, comparative advantage,
economies of scale, fiscal benefits, preferential tax rates. These are the reasons why
businesses such as Nike and HSBC conduct businesses internationally.
Following are the detail reasons to conduct business internationally:
Growth
The businesses who operate their business internationally are because they want
their businesses to expand and make their business world wide. Businesses such as
Nike have massive brand recognition and are known for best quality athlete apparel
all over the world with increased revenue and market share in athlete companies.
Another example of businesses that operate internationally with huge growth in their
customer base and revenue is HSBC who have their many branches in 64 countries.
Businesses make growth when their products sell successfully in one country so
they offer their product to another country in order to make more profit. For example
Nike initially operated in Eugene,Oregon and then started manufacturing products
from China and expanded their brand all over the world, through their global
marketing strategy.
Additional revenue streams
The businesses who sell their products and services internationally but increase their
profit by offering the new product or service in order to make additional revenue
streams. Some businesses launch aur make some new products when they
eventually see the growth in their business so they seek to offer the deals, discounts
and sometimes charge fees from customers to generate additional revenue streams.
Nike recently launched Dri-fit football t-shirts with nike and different countries logos
on, the reason why Nike produced customised countries logo and nike logo with
country flag colour is because they have international fanbase and as well as Nike is
going with the trend, this advancement in their simple black nike t-shirt to customised
t-shirt is the reason why Nike make additional revenue stream. In comparison to
Nike, HSBC also earns additional revenue stream by giving money saving offers,
free student bank cards and as well as giving interest on payments. Both HSBC and
Nike generate additional revenues by offering products and deals which allows
customers to buy it, resulting in massive growth of both businesses,
Brand exploitation
Brand exploitation refers to the business using other brand names across different
countries as a sponsorship to take advantage of its reputation through fake websites
or advertisements, apps ,etc and generate illegal revenue. Nike has many copywriter
who use Nike name to sell fake products, some people make fake Nike products
mostly in asian countries such as china, india, pakistan, indonesia, etc because
people are not aware of what make nike to differentiate itself from copyrights, Nike’s
registered Designs protects the external shape and aesthetics of the product.
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