BTEC International Business Unit 5 Assignment 1

BTEC International Business Unit 5 Assignment 1 BTEC International Business Unit 5 Assignment 1 lOMoAR cPSD| 1 Introduction Why Trade Internationally? In my essay I will be presenting the reasons why two businesses (BMW and River Island) operate in contrasting international markets. Using the information from this research I will equally proceed in explaining the types of finance available for international business and the main features of globalization that affect BMW and River Island. In addition to this I will explore the role of trading blocs on international trade, as well as analyzing the support that is available to the businesses and the barriers of operating internationally. BMW BMW (standing for Bayerische Motoren Werke GmbH, which means Bavarian Engine works) is a German multinational company founded on the 7th March 1916 in Munich, Germany, by Karl Rapp, Camilo Castiglioni, Gustav Otto and Franz Josef Popp. They are now a world leading, big manufacturer of luxury automobiles and motorcycles, as well as one of Germany’s big three producers, with a global presence and a well-known household name. (During WW1, BMW developed engines for planes). BMW is also a subsidiary to; Rolls-Royce motor cars, Drive now, BMW Bank, John Cooper works and many more. This company is incorporated and owned by shareholders, who are: “Stefan Quandt, Susanne Klatten , the Quandt family, and Public investors. BMW’s headquarters is based In Germany. River Island River Island is a London Headquartered fashion brand company, founded in 1948 in East End of London, by Bernard Lewis and brothers. Owned by the Lewis Family. With over 60 years of fashion retailing experience, River Island is one of the most well-known and loved brands on the High Street.1 This company is owned by shareholders, who are: Bernard Lewis, Leo Lewis (senior executive and son of Bernard Lewis), Clive Lewis (Chief executive) and Ben Lewis (Bernards nephew), this is a family incorporated business. lOMoAR cPSD| 2 P1: Explain why two businesses operate in contrasting international market BMW BMW (Bavarian Engine works) is a multinational company and turned into a public limited company (PLC) in 1918, as such it is publicly traded on the Frankfurt Stock Exchange. They are involved in the Automobile industry, producing luxury cars and motorbikes. As BMW is a PLC they are owned by shareholders, who are; Stefan Quandt (a German industrialist and engineer) who owns 29%, Susanne Klatten (a successful investor and sister to Stefan Quandt) who owns 21%, the Quandt family (a long-time shareholder of BMW AG, and between a brother and sister, they own half of the company) and public investors own the other 50%”2 Given that it’s a PLC company shareholder have limited liability. PLC company hasits advantages and disadvantages. Advantages: • Personal assets of shareholders are protected, and they would only lose money that they have invested, should the business fail. • Better access to capital as well as the opportunity to raise funds by selling shares. This could help to grow and expand their business; however, the public can take control of the company. • Liquidity, which allows shareholders to be able to buy and sell their shares • Tax efficient income where Directors and the owners can pay themselves a dividend. Disadvantages: • Lots of legal requirements, such as delivering a corporation tax return to HMRC • The company must (by law) disclose information and their main accounts out publicly which means BMW can be inspected by the public and competitors can take advantage of the situation so that it could benefit them. • Given that anyone can buy their shares; an interested party can take over the company • Setting up costs are expensive