Sami Uddin
Learning Aim E: Examine the strategic and operational approaches to developing international
trade
P8: Explain how products and process have to be adapted for international markets by a selected
business
It is important to consider the different models of expansions when deciding to go into a new market
or even a new country along with considering the demand and preferences of those customers in
those areas. Around the world, there are difference and adaptions that must be made in order to
satisfy the local needs and also wants. For any type of business wanting to trade internationally they
should consider the impact of these adaptations and the extent to which they need to make these
changes. Adapting a product in order to meet the needs and wants from customers within a
different geographical area is a huge benefit but however it will require a huge amount of time and
money.
When launching a product into the foreign markets, businesses are able to use a standard marketing
mix or adapt their marketing mix in order to meet the needs of these customers and as well as to
suit the country they are carrying out their business activities. Within the international markets
businesses will need to consider a huge amount of different factors such as the customers religious
and cultural backgrounds, along with buying habits and their personal income. In many different
situations a business will have to adapt their product and their marketing strategy in order to meet
the needs within a different country or culture.
As with international product decisions a business can either adapt or standardise their promotional
strategy and message. Advertising messages in countries may have to be adapted because of the
language, political climate, cultural attitudes and also religious practices. For an example, a
promotional method in one country may seem as not appropriate for that country as people do not
understand the language and this could lead to offence in another and cause anger among those
from that country. Every aspect of promotional detail will need to have been researched and
planning for an example would be the colour. The colour red in the Bangladesh flag is a red disc on
top of a dark green banner. The red disc represents the sun rising over Bangladesh and also the
blood of those who died for the independence of Bangladesh.
An example of a business that did not adapt efficiently to a new market is Tesco failure in America.
One of the main reasons why Tesco failed is that it had a lot to do with miss-interpretation of the
data that they collected. It is important to be able to understand the context in which data is
collected. Although British and Americans share a heritage and speak the same language, this
doesn’t mean the same, however, they do have wide cultural differences. It is a common mistake of
UK companies trying to break into the US market to think of the USA as one market.
M5: Analyse the effectiveness of the strategies and resources used by a selected international
business
A subsidiary business is one where the parent business has got a holding in it’s shares of 50% or
more. It is controlled by the parent business but can operate in another country. The subsidiary has
to follow the laws of the country in which they are based and pay relevant taxes and business
expense accordingly. There are two ways to establish a subsidiary business of a parent company – a
business can be set up in the new country as a subsidiary of an existing business or an existing
business can be taken over. In terms of legal liabilities, the subsidiary business operates in its own
right so this means that it has its own legal liabilities. Tesco have many other branches around the
world such as India, Malaysia, Ireland and Czech Republic. The benefits of having multiple branches
, Sami Uddin
is that it leads to business expansion which then leads to business growth and therefore they are
able to build a brand loyalty and trust and this will increase a wider customer base and therefore
leads to Tesco making more revenue and sales. A benefit of operating in multiple countries is that
there is more exposure within the market therefore this leads to a higher reputation as a business
and therefore customers will trust Tesco for what they do.
Joint ventures is when two or more businesses have joined together by contractual arrangement to
focus on a particular business transaction or deal. Businesses enter into joint ventures to reduce the
risk and share expertise. A business that produces an item may enter into a joint venture with a
trading business as their business complement each other. Tesco has sold 20% of it’s share of a joint
venture in China to a unit of it’s partner China Resources Holdings for £275 million, establishing it’s
exit from the country.
https://www.retailgazette.co.uk/blog/2020/02/tesco-sells-20-share-chinese-joint-venture-275m/
Partnerships, like joint ventures, are used to bring different parties together. However, partnerships
are usually for the longer term and join the different businesses together more closely through legal
processes. Partnerships can be brought together for commercial reasons or to share expertise.
Partnerships can be brought together with unlimited liability for the actions of each partner, or more
commonly, with limited liability. Tesco have partnerships such as health charity partnership, WWF,
redistribution charities and race for life and many more. In terms of ownership type, Tesco do not
operate as a partnership as they are too big to operate, they are a Public Limited Company
ownership type.
Agencies are another way of expanding internationally, for example Export to Japan. Export agencies
or agents help businesses to trade internationally by: giving information and contacts for the
markets in particular countries, identifying opportunities in countries for business to take place,
using their own offices and staff to promote sales, keeping control of the goods that the business is
trying to sell in the new country. Agencies do charge international businesses for this service and this
charge can be quite expensive. It can range from 2.5 per cent to 15 per cent, depending on the
countries where trade is happening and the type of product or service. Tesco do not have any type
of agencies.
Businesses will decide that licensing is a better way to expand internationally. Licensing means that a
business enters into an agreement to let another business manufacture their product or market
their services in another country as a licensee. Burton’s Biscuits produce American brands in the UK
under licence. Licensing can give permission to another business to sell services, expertise or even
ideas on behalf of the licensor. Licensing agreements can be used to cover copyright, patents and
other forms of agreement. They can also be offered exclusively or nonexclusively in different
countries. Exclusively means that only the licensee can produce the goods or offer those services.
Tesco has honoured a number of its licensing partners by recognising key contributions made over
the past year during its annual conference. By having certain types of licensing such as an alcohol a
retail business like Tesco will be legally allowed to sell alcohol. Alcohol is one of the most popular
items bought in the UK and with the coronavirus crisis it led to pubs being closed meaning that
people were not able to get any alcohol so they had to go to the retail stores to buy some.
https://www.gov.uk/guidance/alcohol-licensing
https://www.licensingsource.net/tesco-honours-brand-licensing-partners/
Learning Aim E: Examine the strategic and operational approaches to developing international
trade
P8: Explain how products and process have to be adapted for international markets by a selected
business
It is important to consider the different models of expansions when deciding to go into a new market
or even a new country along with considering the demand and preferences of those customers in
those areas. Around the world, there are difference and adaptions that must be made in order to
satisfy the local needs and also wants. For any type of business wanting to trade internationally they
should consider the impact of these adaptations and the extent to which they need to make these
changes. Adapting a product in order to meet the needs and wants from customers within a
different geographical area is a huge benefit but however it will require a huge amount of time and
money.
When launching a product into the foreign markets, businesses are able to use a standard marketing
mix or adapt their marketing mix in order to meet the needs of these customers and as well as to
suit the country they are carrying out their business activities. Within the international markets
businesses will need to consider a huge amount of different factors such as the customers religious
and cultural backgrounds, along with buying habits and their personal income. In many different
situations a business will have to adapt their product and their marketing strategy in order to meet
the needs within a different country or culture.
As with international product decisions a business can either adapt or standardise their promotional
strategy and message. Advertising messages in countries may have to be adapted because of the
language, political climate, cultural attitudes and also religious practices. For an example, a
promotional method in one country may seem as not appropriate for that country as people do not
understand the language and this could lead to offence in another and cause anger among those
from that country. Every aspect of promotional detail will need to have been researched and
planning for an example would be the colour. The colour red in the Bangladesh flag is a red disc on
top of a dark green banner. The red disc represents the sun rising over Bangladesh and also the
blood of those who died for the independence of Bangladesh.
An example of a business that did not adapt efficiently to a new market is Tesco failure in America.
One of the main reasons why Tesco failed is that it had a lot to do with miss-interpretation of the
data that they collected. It is important to be able to understand the context in which data is
collected. Although British and Americans share a heritage and speak the same language, this
doesn’t mean the same, however, they do have wide cultural differences. It is a common mistake of
UK companies trying to break into the US market to think of the USA as one market.
M5: Analyse the effectiveness of the strategies and resources used by a selected international
business
A subsidiary business is one where the parent business has got a holding in it’s shares of 50% or
more. It is controlled by the parent business but can operate in another country. The subsidiary has
to follow the laws of the country in which they are based and pay relevant taxes and business
expense accordingly. There are two ways to establish a subsidiary business of a parent company – a
business can be set up in the new country as a subsidiary of an existing business or an existing
business can be taken over. In terms of legal liabilities, the subsidiary business operates in its own
right so this means that it has its own legal liabilities. Tesco have many other branches around the
world such as India, Malaysia, Ireland and Czech Republic. The benefits of having multiple branches
, Sami Uddin
is that it leads to business expansion which then leads to business growth and therefore they are
able to build a brand loyalty and trust and this will increase a wider customer base and therefore
leads to Tesco making more revenue and sales. A benefit of operating in multiple countries is that
there is more exposure within the market therefore this leads to a higher reputation as a business
and therefore customers will trust Tesco for what they do.
Joint ventures is when two or more businesses have joined together by contractual arrangement to
focus on a particular business transaction or deal. Businesses enter into joint ventures to reduce the
risk and share expertise. A business that produces an item may enter into a joint venture with a
trading business as their business complement each other. Tesco has sold 20% of it’s share of a joint
venture in China to a unit of it’s partner China Resources Holdings for £275 million, establishing it’s
exit from the country.
https://www.retailgazette.co.uk/blog/2020/02/tesco-sells-20-share-chinese-joint-venture-275m/
Partnerships, like joint ventures, are used to bring different parties together. However, partnerships
are usually for the longer term and join the different businesses together more closely through legal
processes. Partnerships can be brought together for commercial reasons or to share expertise.
Partnerships can be brought together with unlimited liability for the actions of each partner, or more
commonly, with limited liability. Tesco have partnerships such as health charity partnership, WWF,
redistribution charities and race for life and many more. In terms of ownership type, Tesco do not
operate as a partnership as they are too big to operate, they are a Public Limited Company
ownership type.
Agencies are another way of expanding internationally, for example Export to Japan. Export agencies
or agents help businesses to trade internationally by: giving information and contacts for the
markets in particular countries, identifying opportunities in countries for business to take place,
using their own offices and staff to promote sales, keeping control of the goods that the business is
trying to sell in the new country. Agencies do charge international businesses for this service and this
charge can be quite expensive. It can range from 2.5 per cent to 15 per cent, depending on the
countries where trade is happening and the type of product or service. Tesco do not have any type
of agencies.
Businesses will decide that licensing is a better way to expand internationally. Licensing means that a
business enters into an agreement to let another business manufacture their product or market
their services in another country as a licensee. Burton’s Biscuits produce American brands in the UK
under licence. Licensing can give permission to another business to sell services, expertise or even
ideas on behalf of the licensor. Licensing agreements can be used to cover copyright, patents and
other forms of agreement. They can also be offered exclusively or nonexclusively in different
countries. Exclusively means that only the licensee can produce the goods or offer those services.
Tesco has honoured a number of its licensing partners by recognising key contributions made over
the past year during its annual conference. By having certain types of licensing such as an alcohol a
retail business like Tesco will be legally allowed to sell alcohol. Alcohol is one of the most popular
items bought in the UK and with the coronavirus crisis it led to pubs being closed meaning that
people were not able to get any alcohol so they had to go to the retail stores to buy some.
https://www.gov.uk/guidance/alcohol-licensing
https://www.licensingsource.net/tesco-honours-brand-licensing-partners/
